Anadarko Petroleum Corporation (APC) reported fourth-quarter 2014 adjusted earnings of 37 cents per share, nowhere near the Zacks Consensus Estimate of 82 cents. This amounted to a negative earnings surprise of 54.9%. Quarterly earnings also slumped 50% year over year, primarily due to lower price realized for crude oil and condensate and NGL sales.
On a GAAP basis, the company registered a loss per share of 78 cents compared with the year-ago loss of $1.53 per share.
For 2014, Anadarko reported adjusted earnings of $4.54 per share, lagging the Zacks Consensus Estimate of $4.62 per share by 1.7%.
Total Revenue
In the fourth quarter of 2014, Anadarko Petroleum’s total revenues of $3,177 million lagged the Zacks Consensus Estimate of $3,779 million by 15.9%. Reported revenues also dropped 4.8% from $3,338 million a year ago.
Revenues for 2014 came in at $18.5 billion, surpassing the Zacks Consensus Estimate of $17.5 billion by 5.4%.
Operational Highlights
In the quarter under review, Anadarko Petroleum's average daily sales volume increased nearly 6% year over year to 854,000 barrels of oil equivalent per day (BOE/d). This was primarily driven by strong sales volume from the company’s operations in the Wattenberg field.
The quarterly sales volume for natural gas was 2,549 million cubic feet per day (MMcf/d), down 1.5% year over year. Crude oil and condensate and NGL sales volume stood at 300 thousand barrels per day (MBbls/d), up 2.7% year over year and 129 MBbls/d, up 8.4% year over year, respectively.
Realized prices for natural gas, crude oil and condensate and NGL averaged $3.46 per thousand cubic feet (flat year over year), $71.67 per barrel (down 27.8%) and $29.63 per barrel (down 26.5%), respectively, in the reported quarter.
Anadarko Petroleum’s total costs and expenses escalated 17.1% year over year to $3,656 million, primarily due to higher oil and gas transportation expenses, exploration expenses and depreciation, depletion, and amortization charges.
Interest expenses increased 15% to $199 million from $173 million in the prior-year quarter, primarily due to a rise in debt levels.
Financial Condition
Anadarko Petroleum had cash and cash equivalents of $7.4 billion as of Dec 31, 2014 compared with $3.7 billion as of Dec 31, 2013.
Long-term debt as of Dec 31, 2014 was $15.1 billion compared with $13.1 billion as of Dec 31, 2013.
Anadarko Petroleum's net cash from operating activities during the quarter was almost $2.0 billion compared with $2.1 billion in the prior-year period.
In the reported quarter, the company’s capital expenditure was $2.2 billion, slightly down from $2.6 billion in the year-ago period.
Peer Releases
All oil and gas majors did not fare as poorly as Anadarko. Listed below are some of the names that came up with positive earnings surprises in the fourth quarter.
Murphy Oil Corporation (MUR) reported fourth-quarter 2014 adjusted earnings of 39 cents per share, surpassing the Zacks Consensus Estimate by 56%.
Occidental Petroleum Corporation (OXY) reported fourth-quarter 2014 adjusted earnings of 72 cents per share, ahead of the Zacks Consensus Estimate of 68 cents by 5.9%.
ExxonMobil Corporation (XOM) posted fourth-quarter 2014 earnings of $1.56 per share, beating the Zacks Consensus Estimate of $1.33.
Our View
Anadarko Petroleum reported disappointing fourth quarter earnings and revenues, missing the Zacks Consensus Estimate. Earnings in the reported quarter slumped to half of its prior-year value on plunging oil prices.
On the positive, Anadarko is on track with its projects like the Heidelberg project and various other drilling activities in GoM and offshore Ghana.
Although the company is undertaking measures to expand its oil reserves by large scale drilling projects, sinking oil prices are undermining the stock’s performance in spite of rising sales output.
Anadarko Petroleum currently has a Zacks Rank #5 (Strong Sell).
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