APA Case Study

APA corporations are a holdings company for Apache Corporations. The business organization is engaged in producing and offering hydrocarbon exploration. It operates in the petroleum industry and is headquartered in Houston. The business has its presence in major countries including United States, United Kingdom, Egypt, and Suriname. Apache Corporation was founded in the year 1954 in the United States. Currently, the operations and activities of the business organization are primarily focused on Permian Basic including the Eagle Ford shale and Austin Chalk areas of southeast Texas, the Gulf Coast, and the Gulf of Mexico. The North Sea plays an important role in contributing to the overall success of the business organization. It provides competitive investment opportunities to the business organization thereby enabling the business organization to leverage existing infrastructure, strong cash flow generation, and potential reserve with a moderate risk exploration potential. It has been able to maintain an inventory of new career development opportunities and exploration through acquisition.

APA corporations believe in maintaining strong corporate governance and operating in a responsible manner which is highly essential for the business organization. It helps to better understand and respond to the varied needs of the key stakeholders. It believes that corporate governance is more than just a set of practices and principles for the business organization. It must be embedded into the culture of the organization and must be demonstrated in its actions and engagements on a daily basis along with the values of honesty and integrity. 

APA corporations have taken various steps and procedures to address environmental threats and impacts. It has undertaken environmental responsibility and has been committed to reducing environmental impacts in all the stages of its operations. It ensures effective and thoughtful evaluation and implementation of advanced technologies, practices, and procedures that benefit the organization by reducing its costs. Currently, the business organization has also announced new ESG goals directed to employee compensation. 

• It has been planning to eliminate routine flaring by the end of the year and reduce its overall flaring intensity and gas produced in 2021. 
• It has also been planning to reduce freshwater consumption in the United States to less than 20%. 

The operations and activities of the business organization are executed while prioritizing affordable, implementation reliable energy products thereby protecting the environment. It plays an active role in tackling climate change issues and challenges faced by the entire globe. It has been focusing on affordable, reliable ways to reduce emissions into the atmosphere. It is engaged in identifying and managing potential risks and opportunities to manage climate change. 

Earnings and revenue generation of APA corporations

The APA corporations have reportedly attributed to the net income and common stock of $388 million, or $1.02 per diluted share. APA’s first-quarter earnings were $346 million, or $0.91 per diluted share. Net cash provided by operating activities was $671 million, and adjusted EBITDAX was $1.14 billion. The company generated $502 million in free cash flow during the quarter. 

SWOT analysis

The SWOT analysis framework can be used to determine the internal strengths, weaknesses, opportunities, and threats of the business organization. 

Strengths of APA corporations

Wide Geographical diversifications – The APA corporations have a wide geographical diversification and have been working geographically for business expansion. The diversification of the business organization and expansion of its services in various regions strengthens the operations and activities of the business organization. 

Effective supply chain management – The business organization has an effective supply chain management which positively increases the supply of certain products and communities required by the business organization. This helps to improve the operational aspects and enhance brand recognition in the domestic as well as in the global market. 

Effective execution of business operations – APA corporations have an effective flow of upstream operations in an organized manner. The upstream operations strengthen the business operations in an effective and efficient manner. The business organization has been operating its services efficiently in an economically strong country like America. 

Strong online position – It has a strong online position in the market which helps the business organization to keep the stakeholders updated and engaged with the operations and activities of the business organization. 

Weakness of APA corporations

Slower growth rate - APA corporations has been facing slower growth and performance of the products and services in some countries except for Canada and the North Sea. 

Unorganized acquisition of assets – The acquisition of assets is too many which may not be the actual requirement of the company or needed for production. It is unable to fulfill the cost issues on it. 

Lack of innovative products and services – The products and services have a limited range with a lack of innovation and improvement. These factors might result in a lack of interest among the customers.  

Opportunities of APA corporations

Increase in demand for natural gas – The demand for natural gas has increased in the market which provides additional opportunities to entertain the customers with innovative products and services. 

Advancement of technology – The advancement of new technologies in the market provides a better opportunity to enhance, explore and discover new inventions and ensure a higher level of success and prosperity. 

Threats of APA corporations

Economic slowdown – The global economic slowdown caused by the pandemic situation might have a significant impact on the operations and activities of APA corporations. 

Fluctuation of prices – The crisis situation and challenges has increased the price elasticity of crude gas and oil. This might increase the level of uncertainty in the market and affect the profitability of the business organization. 

Increase in competition – The level of prevailing competition in the market has intensified which is a major threat to the position and profitability of the business organization. The prices settled by other organizations in the market might hamper the reputation of the organization and it may not be suited for the production level of the organization. 

PESTLE analysis of APA corporations

The PESTLE analysis framework helps to determine the external environmental factors including political, economic, social, technological, legal, and environmental factors that might have a significant impact on the business operations and activities. These factors might pose to be a threat or opportunity to the business organization. 

Political factors – APA corporations operate in various countries and regions with different political environments which might have a negative impact on the business. The Brexit uncertainties and political tensions between countries especially the US and China might have a negative impact on the business activities and operations. 

Economic factors – The economic slowdown caused by the pandemic situation have a significant impact on the operations and execution of business activities with the lockdown and other restrictions imposed by the business organization. The fluctuations of supply and demand on the oil prices might threaten the smooth operations of the business organization. It might also reduce the growth and expansion rate of the company due to reduced profitability. 

Social factors – Consumers have become increasingly conscious about the environmental impact and sustainability practices of the business organization. This might have positive impacts on APA corporations as it has a strong policy regarding sustainability. It has undertaken various initiatives and internal policies to reduce the impact on the environment and increase the sustainability of the business organization. The online presence provides a better opportunity to engage with the customers and inform the stakeholders regarding its sustainability practices. This will enable the business organization to increase its reputation in the market. 

Technological factors – The technological factors might influence an organization internally as well as externally. Therefore, business organizations need to implement the latest technologies, techniques, and methods to enhance their business operations and maintain their position in the market. In the oil and gas industry, technologies and machinery have improved in exploration, exploitation, transportation, storage, and refineries. Technologies and new techniques also provide a better opportunity to reduce the time of production and increase its efficiency. Therefore, this factor provides an opportunity for APA corporations. 

Environmental factors – The environmental factors include the geographical position, climate, flora, fauna, and natural resources of the business. The geographic and environmental position influences the activities and operations of the oil reserves. The increase in natural disasters like tornados, cyclones, extreme temperatures, and storms might have negative impacts on the operations and activities of the business organization. The oil and gas industry is known to majorly contribute to environmental pollution. Therefore, it needs to comply with environmental laws and regulations. These policies and procedures have a better opportunity to increase environmental sustainability and increase brand image and reputation in the market. 

Legal factors – The oil and gas industry is heavily regulated by laws and legislation. The governmental intervention might affect the smooth operations and activities of the business organization. The government might impose laws and regulations for social protection, consumer protection, competition regulation, and pollution.