Key Takeaways From Anadarko’s First Quarter Results

Anadarko Petroleum (NYSE: APC) reported its first-quarter 2018 results on 1st May and conducted a conference call with analysts the following day. The company reported an EPS (Non-GAAP) of $0.52 vis-à-vis a net loss of $0.60 per share reported a year ago, benefiting from the company’s margin improvements. However, revenue declined by 19% year-on-year (y-o-y) and was reported at $3 billion, largely reflecting the consequent impact of the company’s recent asset sales. Adjusted for the recent divestitures, Anadarko said that it achieved record oil production volume and oil production mix. The company’s top line additionally benefited from the prevailing higher crude oil prices.

Anadarko reported a total oil sales volume of 367 thousand barrels per day (MBbl/d) vs 338 MBbl/d reported a year ago, adjusted for the recent divestitures. The company’s Delaware basin, the DJ basin, and the deepwater assets in the Gulf of Mexico (GOM) have remained a primary driver for this volume growth through the quarter, with recorded sales volume experienced in its DJ basin and the deepwater assets. The company has additionally been successful in increasing its oil production mix from 53% in Q4 to 57% in the current quarter.

Anadarko’s top line further benefited from an increase in oil prices and reported a 26% rise in its realized price per barrel of oil. Crude oil prices have displayed a stellar performance in the first quarter of 2018, aided by the extension of the oil production cuts by the Organization of Petroleum Exporting Countries (OPEC) and Non-OPEC allies coupled with the recent geopolitical tension in the Middle East and a weaker dollar. Anadarko reported an average realized oil price of $63.66 per barrel ($/Bbl) in the first quarter of 2018 vs 50.34 $/Bbl reported in the same period last year.

Furthermore, a proportionate increase in the share of the liquid composition to the company’s total output has enabled it to achieve significant margin improvement in Q1. The company’s earnings release claimed to have achieved its highest per-barrel margin since 2014 when WTI averaged at $93 / Bbl. Anadarko has additionally raised its 2018 total production guidance to 658 to 685 thousand barrels of oil equivalent per day (MBOE/d) from its earlier guidance of 652-679 MBOE/d, with a significant proportion of this growth expected in the production of oil. Our base case has been updated to reflect these recent changes. You can make changes to our assumptions in our interactive dashboard to arrive at your own fair price estimate for the company.

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