Anadarko Petroleum Corporation (APC) posted net earnings from continuing operations of 21 cents per share for the third quarter, below the Zacks Consensus Estimate of 30 cents but significantly above the net loss of 11 cents reported in the same period last year. The year-over-year increase is driven by higher sales volumes.
On a GAAP basis, the company posted a loss of 5 cents per share compared to earnings of 40 cents in the year-ago quarter. The loss was due to inclusion of special items related to charges for commodity price hedges.
Operational Highlights
Revenue of $2.55 billion in the quarter showed a negative surprise of 2.3% from the Zacks Consensus Estimate of $2.61 billion, while it dipped 23.7% year over year from $2.87 billion last year.
During the quarter, crude oil & condensate and NGL revenues improved 6.6% and 36.7%, respectively, and revenues from natural gas improved 31.8%. Liquids and gas revenues in the quarter improved largely due to higher hydrocarbon prices.
Sales volumes in the quarter improved 1.8% to 58 million barrels of oil equivalent (MMBOE) or 329 thousand BOE per day (MBOE/d), which was at the upper end of the company’s guidance. This outperformance stemmed mainly from significant growth in its major domestic onshore resource plays, specifically, the Rocky Mountain region and the Southern and Appalachia region, which have delivered sales volumes growth rates of 10% and 9%, respectively.
Daily sales volumes of crude oil & condensate, natural gas and natural gas liquids (NGL) averaged 192,000 barrels (down 6.3%), 2.2 billion cubic feet (up 4.2%) and 65,000 barrels (up 20.4%), respectively.
Commodity price realizations remained robust during the quarter with significant improvement in oil, natural gas and NGL prices from last year. Realized prices for crude oil and condensate, natural gas and NGL averaged $73.67 per barrel (up 14%), $3.94 per thousand cubic feet (up 27%) and $38.11 per barrel (up 14%), respectively.
Financials
Anadarko is also focused on strengthening its balance sheet and enhancing its financial flexibility and liquidity. During the quarter, Anadarko replaced its $1.3 billion revolving credit facility with a new five-year $5 billion facility, which remains undrawn.
The company also issued $2 billion worth of debt due in 2017 and retired $422 million and $1.3 billion of debt maturing in 2011 and 2012, respectively. This has significantly reduced Anadarko’s near-term debt maturity profile and extended its average debt maturity to more than 14 years.
The company ended the quarter with $4.2 billion of cash in hand and a total debt of $13.5 billion. It had a debt-to-capitalization ratio of 40% as of September 30, 2010 compared with 39% as of December 31, 2010. Capital expenditure for the quarter was $1.3 billion compared with $849 million last year.
Outlook
Encouraged by the consistent performance of its producing properties, Anadarko has raised its outlook for full-year sales volumes to a range of 233−236 MMBOE. For the fourth quarter of 2010, the company expects sales volumes in the 54−57 MMBOE range.
However, Anadarko has lowered the midpoint of its anticipated capital expenditures for 2010. The company now expects capital expenditures in the range of $5.075−$5.270 billion for 2010 and $1.265−$1.460 billion for the fourth quarter.
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