UPDATE: Imperial Capital Initiates Coverage On Apache

Imperial Capital initiated coverage on Apache Corporation (NYSE: APA) with an Outperform rating and $92 price target.

Analyst Bob Christensen noted that his “price target is about 26 percent above the recent share price. We see APA’s high level of drilling in its liquids-rich U.S. onshore areas, the Permian, Mid-Continent, and more recently, in the East Texas Eagle Ford, yielding strong and predictable high-margin production growth, which we believe is likely to continue for years to come.

“Moreover, these core North American onshore areas have been magnified as to their contribution possibilities by APA’s significant divestiture program of less predictable producing assets over the past 24 months, and further magnified on a per share basis by its large share repurchase program.”

Christensen also felt that “APA’s divestiture program has yielded far better proceeds and values than we initially thought, so we are highly optimistic about further restructuring moves. Those moves, which likely involve the shedding of substantial international assets, should create even more value and even greater focus on onshore North America.”

The analyst report concluded, “the bottom line is that APA is a value stock, highly leveraged to crude oil, where additional restructuring can unlock value and it is, in our view, a logical equity to choose in the current environment of volatile world oil prices and represents an opportunity to participate in their recovery.”

Apache traded at $72.10 in the pre-market, up 0.07 percent.