Wednesday, July 10, 2013

Investopedia: Can Apache Regain Its Reputation?

It feels like it wasn't all that long ago when Apache (NYSE:APA) was one of the most well-regarded energy companies in the game. Management had a knack for acquiring assets from larger companies at attractive prices and driving a surprising amount of productivity out of them. Along the way, the company developed a very broad portfolio that was well-balanced between oil/gas, individual basins, and near-term/long-term productivity.

Unfortunately, there's a blurry line “diversified” and “unfocused”, and Wall Street has come to the conclusion that Apache is too much of the latter these days. What's more, there are now substantial questions about the company's asset mix and its ability to generate good returns from those assets. Management is responding to these concerns with an asset sale program, and while Egypt is going to loom large in investors' minds for a while yet, I believe these shares are meaningfully undervalued today.

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