NEW YORK (TheStreet) -- Shares of Apache Corp. (APA) are up 1.54% to $73.16 after it was reported that the company plans to reduce spending in North America by 25% next year as falling oil prices make drilling prospects less profitable on the continent, according to Bloomberg.
The Houston-based oil and gas company follows producers including ConocoPhillips (COP) that plan to cut budgets and relocate rigs into profitable regions as prices fell four consecutive months to $74.52 a barrel today, Bloomberg said, adding that this will allow them to boost production even as they spend less.
Apache, which is seeking to sell or spin off international assets from Egypt to Australia to focus on the U.S. and Canada, will spend $4 billion on wells, the company said today in a statement.
Separately, TheStreet Ratings team rates APACHE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate APACHE CORP (APA) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- APACHE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, APACHE CORP increased its bottom line by earning $5.95 versus $4.91 in the prior year. This year, the market expects an improvement in earnings ($6.05 versus $5.95).
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that APA's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
- APA, with its decline in revenue, underperformed when compared the industry average of 6.4%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for APACHE CORP is currently lower than what is desirable, coming in at 29.33%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -38.35% is significantly below that of the industry average.
- Net operating cash flow has declined marginally to $1,896.00 million or 4.14% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, APACHE CORP has marginally lower results.
- You can view the full analysis from the report here: APA Ratings Report