Apache Corporation (APA): The Details You Should Know

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Apache Corporation (NYSE:APA) is projected to earn $9.11 per share this year, growing to $9.85 in 2014. The company trades at a steep discount to its historic average valuation, possibly due to the high volatility of oil prices in today’s market.

To further illustrate how cheap Apache is, let’s take a quick look at two of its peers, Anadarko Petroleum Corporation (NYSE:APC) and Devon Energy Corporation (NYSE:DVN).

Anadarko operates in the United States and also has E&P activities all over the world, and the company has over 2.5 billion BOE of proved reserves. Shares trade for a lofty valuation of 24.7 times last year’s earnings, but the company is projected to grow earnings by an average annual rate of 16.4% going forward. Even with growth like this, I don’t think Anadarko is such a great deal, especially when compared with Apache Corporation (NYSE:APA). To put things in a future value perspective, Anadarko trades for 15.7 times 2015’s projected earnings, compared with just 7.1 for Apache.

Unlike the other two, Devon Energy Corporation (NYSE:DVN) operates in just North American onshore areas, and holds about 14 million acres. Devon has the most proved reserves of the three, at over 3 billion BOE. The company is valued right between the others, at just under 18 times earnings. With 18% annual growth projected between now and 2015, Devon may be a good deal right now. However, bear in mind that Devon’s lack of geographic diversity does add another set of risks.

Conclusion

When it comes to Apache Corporation (NYSE:APA), analysts seem to agree with my bullishness. The average 12-month price target of the 25 analysts following the company is $98.38, which is more than 20% over the current levels. I don’t know about you, but I’ll take on a little oil price risk for that kind of upside potential!

The article This Oil E&P Company Is Extremely Cheap originally appeared on Fool.com.

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