Bulls Say I'm with the BULLS
The modernization of APA's production-sharing contract with the government in Egypt makes incremental investment more attractive and has turned a stable cash cow into a lucrative growth asset.
APA has a long runway of drilling opportunities in the high-growth, low-cost Permian basin.
APA's discoveries in Suriname are a potential game-changer and could double the firm's production in the next 10 years.
With operations in Egypt, the company is exposed to geopolitical risk in the Middle East. The Arab Spring in the early 2010s serves as an example of unrest.
The company’s bet on the gas-rich Alpine High in the Delaware Basin puts it out on a ledge versus other Permian players that have not chosen to focus on that area as heavily.
Suriname exploration accounts for a large portion of APA's fair value, yet the outcome is highly uncertain: A successful development could drive our estimate much higher, but a complete failure is not out of the question yet.