APA's strong natural gas demand helps it beat third-quarter profit expectations
The oil and gas company APA surpassed Wall Street's expectations for the third quarter profit on Wednesday as strong natural gas demand helped offset weaker production of crude oil.
The average natural gas price jumped by 26% compared to the previous year to $3.25 for a million British thermal units in the third quarter. This was primarily due to the surge in demand for power from data centers that are dedicated to artificial intelligence (AI) and cryptocurrency.
APA reported that the average quarterly realized price of natural gas is $2.25 for every thousand cubic feet. This represents a 57% increase from a year ago, and its production has increased by 18% to 932 million cubic foot per day.
Total production fell 1%, to 413144 barrels equivalent per day (boepd) due to a 9% drop in oil output.
The price of oil has dropped by 14% to $67.43 a barrel.
Crude prices and demand fell in the third quarter, as OPEC+ increased output and fears of oversupply grew amid rising trade tensions that threatened global growth and energy consumption.
APA increased its U.S. crude oil production forecast for fourth quarter to 123,000 bpd. This was still lower than its 147,573 barrels per day reported in the previous year.
APA has also accelerated its saving plan to save $350 million annually by the end of 2025, two years earlier than planned.
By the end of 2026, the company expects to save an additional $50-100 million per year.
LSEG data shows that APA's adjusted profit for the three-month period ended September 30 was 93 cents, compared to analysts' average estimates of 79 cents.
The shares of the company rose 1.6% during extended trading. Reporting by Tanay dhumal, Bengaluru. Editing by Shilpa Majumdar.
(source: Reuters)