Apache Corporation (APA): One Company Buying Its Own Stock. Should You, Too?

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The biggest difference between Apache Corporation (NYSE:APA) and its peers appears to be the fact that Apache is the No. 1 oil producer in Egypt, which brings both volatility and uncertainty. The market clearly seems to be discounting the company’s value because of these assets despite the fact that Egypt delivered $2.7 billion in cash flow last year. Not only that but Apache has seen 17 years of uninterrupted production growth and is investing $1.1 billion in the country this year to continue to grow production. What worries investors is the risk that its position in Egypt could end badly.

I think it’s highly unlikely that Apache pursues a similar path as Devon Energy Corp (NYSE:DVN), which has spent the past few years selling off its international operations to focus on its North American onshore business. Apache isn’t likely to get anywhere near the full value of its international assets by selling them. It’s better off just reinvesting the cash generated from those assets to buy back its cheap stock.

One area to watch, however, is Occidental Petroleum Corporation (NYSE:OXY)’s plan to split its U.S. and international assets into two separate companies. Some suggest that the $74 billion market-cap company could unlock up to the $47 billion in value by splitting the company. That could cause a wave of similar transactions, which is exactly what happened when both ConocoPhillips (NYSE:COP) and Marathon Oil Corporation (NYSE:MRO) split off their respective refining businesses. It’s a wave that could eventually hit Apache.

As an investor, there is clearly a lot of potential value to be unlocked in Apache’s stock. Its management team is making the right move in buying back its stock as Apache Corporation (NYSE:APA) looks like a fairly compelling value right here. As an investor, if you are looking for value, Apache is a good company to buy. Not only that but you’d be in good company as this billionaire just bought shares, too.

The article 1 Company Buying Its Own Stock. Should You, Too? originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo owns shares of ConocoPhillips. The Motley Fool owns shares of Apache and Devon Energy and has the following options on Chesapeake Energy: long Jan. 2014 $20 calls, long Jan. 2014 $30 calls, and short Jan. 2014 $15 puts.

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