Beats expectations on Permian strength
- 3Q22 adjusted EPS came in at US$1.97, beating consensus estimate of US$1.82
- Global production in line with expectations, supported by Permian performance
- FY22F capital guidance being maintained
APA announced strong 3Q22 results; Permian Basin operations offset North Sea production weakness. APA reported 3Q22 adjusted EBITDAX and adjusted earnings of US$1.7bn and US$651m (US$1.97 per diluted share); while generated net cash from operating activities and Free Cash Flow (FCF) of US$1.1bn and US$609m respectively (average oil price of US$97.81/bbl; average NGLs price of US$33.39/bbl; average gas price of US$5.83/mmbtu). The company reported adjusted global production of 310 mboepd supported by Permian Basin performance. In September 2022, North Sea production was impacted by unplanned downtime at Beryl & Forties due to planned seasonal turnarounds (the production has returned to more normalized levels in October).
During the quarter, APA returned US$373m (c.61% of FCF) to shareholders (APA committed to return ?60% of FCF to shareholders in 2022). The company announced a doubling of annualized dividend to US$1.00 per share starting in 4Q22. In 3Q22, APA repurchased US$332m worth of shares (average price: US$33.85/share). Since the program inception till Oct 2022, the company has repurchased US$1.8bn worth of shares (average price: US$31.65/share). Meanwhile, in attempt to strengthen its balance sheet, APA has paid down US$1.6bn of bond debt till Oct 2022. The company has redeemed a total of US$3.1bn of bond debt since end June 2021, leaving its total debt at US$5.0bn.
Management kept FY22F capital guidance unchanged; Block 53 added more buoyancy. APA is keeping its FY22F capital investment guidance unchanged at US$1.7bn. The company expects 4Q22F adjusted production to be at 328-332 mboepd (up >5% from 3Q22) driven by higher oil production. The company expects it can generate Free Cash Flow of c.US$2.7bn, of which at least US$1.6bn (c.59%) will be returned to shareholders (through dividends and share buybacks). APA announced first exploration discovery on Block 53 (APA 45% WI) offshore Suriname at Baja. The company also achieved its FY22F ESG goal to reduce Egypt upstream routine flaring by at least 40% ahead of schedule.