Apache Corporation (APA) is Quite Cheap Now

A Cheapest Energy Company

At the current trading price of $75.50 per share, Apache is worth nearly $29.6 billion on the market. The company is valued quite cheaply at only 3.4x EV/EBITDA. Rogers didn’t forecast the significant growth for the company, but it was a good company with a good profitability, a good management team, and it was cheap relative to other companies in the energy sector. Apache is the smallest company compared to its two peers Anadarko Petroleum Corporation (NYSE:APC) and BP plc (ADR) (NYSE:BP). With the trading price of $80.40 per share, Anadarko is worth nearly $40.2 billion on the market. BP is trading at $40.80 per share, with a total market cap of more than $130 billion. Both Anadarko and BP have much higher valuations than that of Apache. While Anadarko is valued at 6.42x EV/EBITDA, the market is valuing BP at 6.12x EV multiple. Among the three, BP had the highest level of proved reserves of more than 17.7 billion BOE, while the 2012 proved reserves of Anadarko were around 2.56 billion BOE.

Foolish Bottom Line

Indeed, with the high level of proved reserves, a cheap valuation and high returns on capital, I personally think that Apache Corporation (NYSE:APA) is a decent bet for investors in 2013. Apache might at least reach its net asset value of $130 per share.

The article This Energy Company is Quite Cheap Now originally appeared on Fool.com and is written by Anh HOANG.

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