APA Corp. (APA:NASDAQ) reported the closing of its Callon Petroleum (CPE) acquisition, noted Roth MKM analyst Leo Mariani in an April 1 research note. Two board members came on as a result of this deal: Matthew Bob and Anya Weaving.
Mariani stated that Bob, an independent director and board chair for CPE, was a founding and managing partner of MB Exploration. Weaving had previously worked as the vice chairman of Global Natural Resources at Bank of America Merrill Lynch in 2022. She was also the CFO of SOCO International Plc.
"APA seems quite confident that it can deliver at least the US$150 million of synergies it identified with the CPE acquisition," Mariani commented, adding that historical financials from CPE show this is a likely outcome; however, it may take a few quarters before these results become apparent in APA's numbers. Mariani stated that achieving these numbers would catalyze the stock.
Along with this acquisition, Mariani shared that APA Corp. has better than expected production results after this deal.
APA announced production results of 500,000 Boepd, going higher than Mariani's estimate of 495,000 Boepd. Two-thirds of the volumes reported came from the Permian Basin.
Mariani stated, "We are raising our 2024 CFPS estimate by about 0.7% on slightly higher than expected production post the CPE acquisition. We are also raising our price target by 5% to US$39."
With this, Mariani rated APA Corp. as a Buy.
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Disclosures for Roth MKM, APA Corp., April 1, 2024
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures: The price target and rating history for APA Corporation prior to February 1, 2023 reflect MKM’s published opinion prior to the acquisition of MKM Partners, LLC by Roth Capital Partners, LLC.
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