Investing in Energy? Here’s Why Apache Looks Compelling
With turmoil in Ukraine, investors should consider looking for opportunities in the energy space. Geopolitical tension of almost any sort tends to be a near-term catalyst that drives the price of oil higher, as not only do investors fear that people in these areas (in this case Ukraine) might have trouble getting energy, but they fear contagion and the possibility that we could have several regions throughout the globe where oil is difficult to come across.
This fear should be especially heightened given that in the ongoing conflict, Russia — one of the world’s largest oil producers — is being threatened with economic sanctions, and the government could respond by limiting oil exports to the United States, the European Union, and their allies.
Given this situation in particular, I think investors should consider owning oil companies that not only profit when the price of oil rises but that have been shifting their portfolios to assets in safer jurisdictions. Apache (NYSE:APA) is one company that comes to mind.
Apache has a very long history of generating shareholder value by growing its oil and gas production. However, over the past several years, shareholders were frustrated by the fact that Apache operated a lot of oil wells in Egypt and Argentina. Recently, the company decided to reduce its exposure to Egypt from 20 percent to 13 percent of its portfolio, and it decided to divest its Argentinean assets. Going forward, Apache is going to be a North American oil and gas producer.