Anadarko Net Income Declines; Estimates Exceeded

Anadarko Petroleum Corp., the Texas oil company that owns a stake in BP Plc’s damaged Macondo well in the Gulf of Mexico, said its fourth-quarter net income fell on reduced hedging gains even as higher crude prices and production increases boosted profit above analysts’ estimates.

Net income was $111 million, or 22 cents a share, compared with $229 million, or 46 cents, a year earlier, The Woodlands, Texas-based company said today in a statement. Excluding such items as royalty adjustments, profit was 29 cents a share, 8 cents higher than the average of 28 analyst estimates compiled by Bloomberg. Revenue climbed 11 percent to $2.69 billion.

Anadarko reported gains of $30 million on hedging contracts in the fourth quarter, compared with $226 million a year earlier. The company’s sales volumes of oil and gas rose 5.7 percent to the equivalent of 56 million barrels of oil in the quarter, within a forecast of 54 million to 57 million barrels. Oil futures in New York averaged $85.24 a barrel in the quarter, a 12 percent increase from a year earlier.

Anadarko is focusing on areas such as Africa and the Gulf of Mexico for growth in coming years. The company has a 25 percent stake in the Macondo well, which exploded April 20, leading to the largest offshore oil spill in U.S. history. BP, the operator, has a 65 percent interest. A unit of Mitsui Oil Exploration Co., which is 70 percent-owned by Japan’s Mitsui & Co., has the other 10 percent.

Withholding Spill Costs

Anadarko said in a June 18 statement that the explosion was preventable and that actions by BP “likely represent gross negligence or willful misconduct.” Anadarko has said it is withholding reimbursement to BP for costs related to the spill.

Producers in the U.S. Gulf of Mexico haven’t returned to drilling new deep-water exploration wells following last year’s explosion as they seek to satisfy federal regulators that they are adequately prepared to respond to any future spills.

Anadarko said today it will delay production from its $1.3 billion Caesar/Tonga project in the Gulf of Mexico due to a problem with a riser, the equipment that connects the well to a production platform.

Anadarko’s capital spending totaled about $5.27 billion in 2010, compared with an estimate of $5.3 billion to $5.5 billion, said John Christiansen, a company spokesman. Anadarko said it ended the year with about $3.7 billion of cash on hand.

The company said it is positioned to achieve the plan it laid out in 2010 for a compounded annual production growth rate of 7 percent to 9 percent over five years, and to top the equivalent of 3 billion barrels of oil of proved reserves by the end 2014.

Growing Reserves

Anadarko said it added 359 million barrels of proved reserves last year, to bring its estimated total to 2.42 billion barrels.

Even as crude rose, the average natural-gas price in the fourth quarter declined 19 percent in futures trading compared with the year-earlier period.

Today’s earnings report was issued after the close of regular trading on U.S. stock markets.

Anadarko declined 83 cents, or 1.1 percent, to $76.25 in after-hours trading. The stock ended last year at $76.16, 3 percent higher than the closing price on April 20.

(Anadarko will hold an earnings conference call for investors and analysts tomorrow at 10 a.m. New York time. To listen, go to http://www.anadarko.com.)

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.

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