Barron's Bullish On Apache

Printer Friendly Version

At a time when oil production at many of the world's largest fields is slumping, leading to concerns over future supplies in the face of higher demand, Apache, the largest U.S.-based independent oil and natural gas producer, is getting more production out of fields thought to be in decline, prompting Barron's to issue a favorable piece on the shares.

On Wednesday, Texas-based Apache (APA) said one of its wells in the North Sea is now producing 12,567 barrels of oil per day, the highest rate since 1990, and another well is producing almost 8,800 barrels per day. The company said that when it acquired the Forties field in 2003, it was producing 40,000 barrels per day. Production has almost doubled to 70,000 barrels of oil equivalent per day, Apache said.

Apache has a long history of making savvy, disciplined acquisitions, and this latest news is another notch in the company's belt, Barron's reported. The company made $8 billion in acquisitions last year and the news out of the Forties is the latest evidence of Apache's shrewd acquisition strategy, according to Barron's.

Barron's notes that Apache shares trade at just 9.2 times forward earnings, a reasonable level given expectations for an 8.8% increase in earnings from 2011 to 2012 and a 16.5% return on equity. Shares of Apache are up 3% this year compared to a 6% gain for the S&P 500.