APA Earnings: Management Revises Synergies; We Still Believe Shares Are Undervalued

No-moat APA missed on FactSet consensus earnings per share by 19% while delivering on sales. It also came below the midpoint of guidance on production, but only narrowly. The earnings miss was driven by the write-off of two exploration locations in Alaska and one in Suriname. Despite these disappointing results, management remained an active repurchaser of shares, which, we believe, is a prudent action after the close of the stock-heavy Callon acquisition in April. Our new fair value is $54, down slightly from $55, driven mainly by the removal of one rig in acquired acreage and changes to our near-term commodity price forecast.