Apache Corporation (NYSE: APA) is trading lower after beating earnings estimates. The company’s adjusted earnings were $2.94 EPS versus Thomson Reuters estimates of $2.87 EPS. After beating earnings and with the problems in north African operations, it would have seemed that the bar was being set low. A gain of 75% in earnings sounds great on the surface. So why is the stock lower?
Apache’s proven reserves grew about 1% in 2011 and it replaced 133% of its production. These seem to be not good enough for a $40 billion exploration and production giant. A cape-ex plan of $9.5 billion in 2012 also seems a bit high when you consider production growth of 7% to 13%.
Apache is down 1.4% at $106.14 and the 52-week trading range is $73.04 to $134.13. The good news is that at about ten-times earnings it should not fall apart too much. Still, it looks as though investors still want more for less… more output and reserves with lower spending.
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