NEW YORK ( TheStreet) -- For the most part, 2013 will be remembered as a "so-so" year for companies that deal in exploration and production of oil and gas. Even with the volatility and weak demand, Apache (APA - Get Report) was a notable outperformer, despite persistent unrest in areas like Egypt, where Apache have some strong, albeit risky, assets.
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Aside from a strong drilling program and timely acquisitions, Apache is doing well because management has consistently placed winning bets (even on the long-shots). The problem is that in the process of outperforming the likes of Chesapeake Energy (CHK) and Anadarko Petroleum (APC), Apache is no longer an underdog.
When Apache first demonstrated struggles with production growth, I defended the company. This was at a point when the Street turned negative, calling management's maneuvering as "too scattered." But Apache wasn't hardly alone. While management did look for growth through acquisitions, no one can debate that these deals have paid off.
Today, the Street is supportive of Apache management's ideas. While I do still like this company, I worry that expectations may soon get out of hand. As I've said, Apache has done well beating the odds, yes. But this is still a highly volatile commodity-driven industry. So although it is a top-notch energy company, there's still an open question as to whether Apache is the best way to play this recovery.
There are several energy majors, including Exxon Mobil (XOM) and Chevron (CVX), with very compelling outlooks for debt-adjusted production growth over the next three to five years. While both Exxon and Chevron are trading at much cheaper valuations/multiples than Apache, they also come with significantly less risk.