NEW YORK (TheStreet) -- Shares of Apache Corp. (APA) rose 1.88% to $57.50 in pre-market trading Monday after Woodside Petroleum, Australia's second-largest oil and natural gas producer, agreed to purchase Apache's stake in the Wheatstone and Kitimat liquefied natural gas projects and associated reserves for $2.75 billion.
Apache will also receive approximately $1 billion to spend on the projects from June 30 until the closing, the Houston-based Apache said.
"I am confident that Woodside's participation will have a positive impact in seeing these world-class LNG facilities through to first production," said G. Steven Farris, chairman and CEO of Apache.
The Wheatstone and Kitimat projects are two out of dozens under construction or consideration around the world that would help supply Asian markets in need of gas, according to Bloomberg. Both projects are done in partnership with Chevron (CVX) .
The $24 billion Wheatstone facility in Western Australia is approximately halfway completed and would have the capacity to ship 8.9 million metric tons per year. The Kitimat project is one of multiple proposed facilities that would send gas from British Columbia to Asia.
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 deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 6.3%. 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.
- 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. We feel it is likely to report a decline in earnings 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. For the next year, the market is expecting a contraction of 2.2% in earnings ($5.82 versus $5.95).
- 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