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Third Avenue Management Comments on Apache Corp

July 01, 2013 | About:
Holly LaFon

Holly LaFon

255 followers
The Fund initiated a new position in Apache Common (APA) during the quarter. Apache is a Houston based oil and gas exploration and production ("E&P") company. Apache Common seems to be very inexpensive—the shares were purchased at a slight discount to book value, 3.5x earnings before interest, taxes depreciation and amortization ("EBITDA"), 8x expected 2013 earnings and a 20% discount to our conservative estimate of net asset value ("NAV"). The management team, led by CEO Steve Farris, has an impressive long-term track record of growth, and several recent acquisitions,including assets opportunistically acquired from BP after the Macondo oil spill, provide the company with a wealth of development opportunities to drive future net asset value growth. Apache's financial position is strong as most of its debt is long term, low coupon(A-credit rating) and easily supported by cash flow (interest coverage totals about 24x).

From Third Avenue Management's semi-annual 2013 commentary.

Rating: 3.4/5 (10 votes)

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