UPDATE: Stifel Downgrades Apache to Hold on Increased Risk Profile

In a report published Monday, Stifel analyst Amir Arif downgraded the rating on

from Buy to Hold, and removed the $90.00 price target. In the report, Stifel noted, “We are downgrading APA from Buy to Hold as the risk profile on the name has increased due to its Egyptian exposure. Egypt accounts for 19% of production, but approximately 24% of CF, and is a source of FCF for APA. While Egyptian production operations have not been disrupted to date, the potential risk of disruption going forward cannot be ignored. Therefore, while our fair value range of $90 remains the same as our previous target price, we believe that the risk/reward profile has decreased, near-term catalysts have mostly played out, and while the name remains a value stock, we do not see any key drivers to move the name higher. To summarize, the pickup in the risk profile related to its Egyptian operations is the key reason for the downgrade. Also, the lack of any visible remaining catalysts beyond the ongoing slow transition of increasing production mix from US oil plays, limits the potential for any near-term (6 month) improvement in the EBITDA multiple. While the company is still looking at selling assets, we believe that the bulk of key asset sales are already done and a large share buyback representing potentially 6% of shares out has already been announced.” Apache Corporation closed on Friday at $78.99.