Weak Commodity Prices Will Continue To Weigh On Anadarko’s 2Q’16 Revenue And Earnings
Anadarko Petroleum Corporation (NYSE:APC), the US-based independent exploration and production company, is slated to release its 2016 June quarter financial results on 27th July 2016.((Anadarko Schedules Second Quarter 2016 Earnings Conference Call, 11th July 2016, www.anadarko.com)) Even though the oil and gas company’s revenue will see a notable decline due to depressed commodity prices, the fall is expected to be lower-than-anticipated due to the sudden recovery in crude oil prices over the last three months. Further, the company’s efforts to optimize its operating costs by reducing its workforce, and improving its drilling costs, will somewhat offset the impact of a declining top line on its operating profits. Overall, the company is expected to report a loss of 81 cents, as opposed to a profit of 1 cent in the same quarter last year.
We currently have a $56 per share price estimate for Anadarko Petroleum, which is in line with its current market price.
See Our Complete Analysis For Anadarko Petroleum Here
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Crude oil prices, which stood at $35 per barrel at the beginning of the quarter, grew more than 35% in the last three months, due to production disruptions because of a wildfire in Alberta, Canada, geo-political disturbances in Nigeria and Venezuela, and stronger demand for oil. While this led to a small improvement in the global rig count in the month of June, the overall rig count for 2Q’16 continued to be down, both annually as well as sequentially.
Although oil prices have shown signs of recovery in the last quarter, it might be too early to believe that the commodity markets have bottomed out. Thus, the global upstream capital expenditure is likely to remain low, even for the remaining half of 2016. Consequently, we expect Anadarko to abide by its current capital spending target of $2.6-$2.8 billion for the year.
Source: J.P.Morgan Energy Equity Conference, Anadarko Petroleum, June 2016
In order to fund its capital allocation requirements, the company has been actively pursuing asset monetization over the last couple of quarters. The E&P company has a target to complete asset monetizations of up to $3.5 billion over the next few quarters. Of this, the company had already closed monetizations totaling $1.3 billion at the end of 1Q’16 and is advancing towards signing another $700 million in divestitures by the end of 2Q’16.
Have more questions about Anadarko Petroleum (NYSE:APC)? See the links below:
- 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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