Anadarko’s 2Q’16 Earnings Continue To Decline; Company Revises 2016 Production Target Downward
Anadarko Petroleum Corporation (NYSE:APC), the US-based independent exploration and production company, reported its 2016 June quarter financial results on 27th July 2016.((Anadarko Announces Second Quarter 2016 Earnings Conference Call, 27th July 2016, www.anadarko.com)) Although the company’s revenues and profits dropped sharply due to lower production and price realizations, it exceeded the consensus expectation on both the revenue and EPS front, driven by the unexpectedly sharp recovery in commodity prices during the quarter.
We currently have a $56 per share price estimate for Anadarko Petroleum, which is 4% higher than its current market price. We will revisit our price estimate to reflect the 2Q’16 results shortly.
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See Our Complete Analysis For Anadarko Petroleum Here
During the second quarter, crude oil prices rose more than 35% due to variety of reasons such as production disruptions in Canada, Nigeria, and Venezuela. Consequently, Anadarko witnessed a steep improvement in its price realization compared to the first quarter. This partially offset the impact of lower production during the quarter, resulting in 2Q’16 revenue of $1.92 billion, 27% lower compared to last year. The plunge in revenue, along with a 10% rise in the general and administrative expenses, led to the contraction of its operating margin. Further, the company recognized an income tax charge of $314 million as opposed to a tax benefit of $77 million in the same quarter last year. This resulted in the company posting a loss of $692 million, or 1.36 per share in the June quarter.
On the financial side, Anadarko continued to optimize its portfolio to strengthen its balance sheet. So far in 2016, the E&P company has closed asset monetizations worth $2.5 billion and is on track to complete another $1 billion monetizations in the later half of the year. The company is planning to retire its $750 million of 2017 maturities from proceeds of these monetizations.
While Anadarko expects oil prices to recover in 2017, it forecasts the commodity markets to remain weak in the remaining half of 2016. Thus, the company has revised its full year production guidance downwards by roughly 2%. However, the independent oil and gas producer has maintained its capital allocation budget at $2.6-$2.8 billion for the year.
Have more questions about Anadarko Petroleum (NYSE:APC)? See the links below:
- Weak Commodity Prices Will Continue To Weigh On Anadarko’s 2Q’16 Revenue And Earnings
- Anadarko Reports Depressed 1Q’16 Earnings As The Commodity Downturn Persists
- Why Have Oil Prices Touched $50 Per Barrel In The Last Few Days?
- Why Is Saudi Arabia The Strongest Member Of The OPEC?
- Lower Commodity Prices Likely To Create A Dent In Anadarko’s 1Q16 Earnings
- How Will Anadarko’s Revenue Move If Crude Oil Prices Average At $50 Per Barrel In 2018?
- How Will Anadarko’s Revenue Move If Crude Oil Prices Rebound To $100 Per Barrel By 2018?
- Why Are Crude Oil Operations Important For Anadarko?
- How Will Anadarko’s Revenue And EBITDA Grow Over The Next Five Years?
- How Has Anadarko’s Production Mix And Price Realizations Changed Over The Last Five Years?
- How Has Anadarko’s Revenue And EBITDA Changed Over The Last Five Years?
- What Is Anadarko’s Fundamental Value Based On 2016 Estimated Numbers?
- What Is Anadarko Petroleum’s Revenue And EBITDA Breakdown?
- How Has Anadarko Petroleum’s Revenue And EBITDA Composition Changed Between 2010-2016?
- 2015 Earnings Review: Weak Commodity Prices Create A Dent In Anadarko’s Earnings; New Projects May Help The Company To Remain Afloat
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Anadarko Petroleum
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