Anadarko’s 3Q’17 Revenues To Suffer Due To Lower Production

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APC: Anadarko Petroleum logo
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Anadarko Petroleum

Anadarko Petroleum (NYSE:APC), the US-based independent exploration and production (E&P) company, is slated to report its September quarter financial results after the market closes on 31st October 2017((Anadarko To Announce September Quarter 2017 Results, 16th October 2017, www.anadarko.com)). Due to closure of its upstream production in Eagle Ford and the Gulf of Mexico (GOM) due to Hurricanes Harvey and Nate in the third quarter, the market expects Anadarko’s 3Q’17 production to be lower and weigh negatively on its revenues for the quarter. However, the company is likely to show a strong improvement in its earnings both sequentially as well as annually. We have a $53 price estimate for Anadarko’s stock, which is 9% above the current market price.

See Our Complete Analysis For Anadarko Petroleum Here

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Key Trends Witnessed In 3Q’17

  • As mentioned earlier, Anadarko was forced to shut its exploration and drilling operations in Eagle Ford in early September and in the GOM at the end of the month due to Hurricanes Harvey and Nate, respectively. While it did not take long for the company to resume its operations, we expect to see a drop in its production volumes for the quarter.
  • Besides, the commodity prices continued to remain volatile due to the impact of the hurricanes and storms along the US Gulf Coast. Yet, the WTI crude oil prices remained flat and averaged $48.18 per barrel for the September quarter. Thus, with lower output and no substantial improvement in commodity prices, we expect the company’s revenue to remain depressed compared to the previous quarter.

  • Further, Anadarko announced a series of changes in its leadership during the quarter. Most notably, Brad Holly, who was promoted to be the Executive Vice President (EVP) of Anadarko’s US Onshore Exploration and Production Division in May of this year, is leaving the company, making way for Danny Brown to take up the role. Holly was in charge of Anadarko’s Colorado operations in April of this year, when a gas explosion in one of the company’s wells in Firestone claimed the lives of two men and severely injured a woman. According to the management, the new consolidated leadership structure is directed at enhancing the safety and performance of the company and does not contemplate a change in the size of its workforce.
  • Additionally, Anadarko reaffirmed its full year production guidance for its three key basins – deepwater GOM, DJ basin, and Delaware basin. The company expects to average around 130,000 barrels of oil per day (bpd) in the deepwater GOM and exit the year at around 150,000 bpd from the Delaware and DJ basins combined.
  • Going forward, the company will continue to focus on the US onshore and Gulf of Mexico, while exploring long-term opportunities in its emerging liquefied natural gas (LNG) business and selective deepwater exploration.

Anadarko’s Focus Areas In 2017

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