Anadarko Petroleum Corp. (APC) posted net earnings from continuing operations of $1.05 per share for the second quarter of 2013, breezing past the Zacks Consensus Estimate by 16.6% as well as the year-ago earnings by 38.2%.
The earnings results were backed by a rise in oil and natural gas output from Anadarko’s domestic plays and timely execution of deepwater exploration as well as onshore drilling programs.
On a GAAP basis, Anadarko Petroleum reported earnings of $1.83 per share versus a loss of 18 cents per share in the year-ago quarter. The disparity between operating and GAAP earnings was due to an 18 cent negative impact from third-party well and platform decommissioning obligation, a 1 cent charge from impairments, an 81 cent gain from unrealized derivatives, a 2 cent gain from divestitures, and a 7 cent gain a piece from reversal of Canadian indemnification liability and change in uncertain tax positions.
Total Revenue
Revenue of $3.5 billion in the quarter was in line with the Zacks Consensus Estimate while it beat the year-ago figure of $3.2 billion. The year-over-year growth in revenue was mainly due to a sharp 88.5% upsurge in natural gas sales partially offset by 10.2% and 7.4% decline in oil and liquids sales, respectively.
Operational Highlights
Anadarko Petroleum's sales volume in the quarter rose to 69 million barrels of oil equivalent (MMBOE) or 750 thousand BOE per day (MBOE/d) from the corresponding year-ago figures of 68 MMBOE or 742 MBOE/d. This was primarily due to a 4.8% increase in natural gas sales volume in the U.S. In addition, favorable oil production from the El Merck prospect in Algeria helped to drive Anadarko Petroleum’s sales.
Liquids sales volume in the second quarter was flat year over year. Consistent performance from the company’s major U.S. onshore assets, namely, Wattenberg, Eagleford and East Texas HZ kept sales stable.
Realized prices for crude oil and condensate, natural gas and NGL averaged $97.21 per barrel (down 4.0%), $3.88 per thousand cubic feet (up 80.5%) and $34.33 per barrel (down 15.0%), respectively, in the reported quarter.
Anadarko Petroleum made an impressive rebound and posted an operating profit of $1,140 million as opposed to a loss of $279 million in the prior-year period. Healthy revenues with simultaneous cost savings contributed to the margin expansion.
Interest expense during the quarter was $172 million, lower than $190 million in the year-ago quarter.
Financials
Cash and cash equivalents as of Jun 30, 2013, were $4.6 billion versus $2.5 billion as of Dec 31, 2012.
Long-term debt as of Jun 30, 2013 was $13.5 billion versus $13.3 billion as of Dec 31, 2012.
Cash flow from operations in the second quarter of 2013 was $2.5 billion versus $2.0 billion in the year-ago quarter.
Capital expenditure during the quarter was $1.9 billion, increasing from $1.8 billion in the year-ago quarter.
Guidance for 2013
Anadarko Petroleum expects sales volume in the third quarter in the range of 69–72 MMBOE. For full year 2013, the company increased its volume guidance to 281–287 MMBOE from the prior 279–287 MMBOE.
Marketing and gathering margins for the third quarter and 2013 are expected in the band $30–$50 million and $135–$165 million, respectively.
General and administrative expenses for the third quarter and 2013 are estimated in the band $275–$295 million and $1.1–$1.2 billion, respectively.
Capital expenditure of Anadarko Petroleum for the third quarter and full year 2013 is projected in the vicinity of $1.8–$2.0 billion and $7.2–$7.6 billion, respectively.
Other Operators
Other exploration companies yet to post their earnings are as follows:
EPL Oil & Gas, Inc. (EPL) is scheduled to report its second quarter earnings results on Aug 1, 2013. The Zacks Consensus Estimate for the quarter is set at 97 cents.
EXCO Resources Inc. (XCO) is slated to release its second quarter 2013 earnings on Aug 5, 2013. The Zacks Consensus Estimate for the quarter is set at 11 cents.
Memorial Production Partners LP. (MEMP) is scheduled to report its second quarter earnings results on Aug 7, 2013. The Zacks Consensus Estimate for the quarter is set at 43 cents.
Our View
Anadarko Petroleum posted upbeat results in the second quarter of 2013. Apart from its domestic plays, which will continue to be key earnings drivers, we believe its large-scale exploration in the deepwater Gulf of Mexico will add to the momentum. The gradual recovery of crude oil prices will also benefit the company as oil comprises a major share of the revenues.
The company will capitalize on the service start-up of the El Merck oil prospect in Algeria while its ongoing effort to increase its options in Ghana and Mozambique will boost future prospects.
However, Anadarko Petroleum needs to be cautious regarding the lingering threat of political instability in Africa. Anadarko Petroleum Corp. presently retains a Zacks Rank #3 (Hold).
Be the first to comment