Anadarko Exceeds Profit Estimates on Record Petroleum Sales
Anadarko Petroleum Corp. (APC), the Texas oil company that owns a stake in BP Plc (BP/)’s damaged Macondo well in the Gulf of Mexico, reported a first-quarter profit yesterday that surpassed analysts’ estimates on record sales volumes.
The company has forged ahead with projects onshore U.S. and off the coast of Africa as drilling in the Gulf slowed following the Macondo explosion in April 2010. BP is seeking billions of dollars from Anadarko in spill-related costs and has started a dispute resolution process to collect.
Anadarko, which has blamed BP for the Gulf explosion and the record offshore U.S. oil spill that followed, said first- quarter sales volumes climbed to the equivalent of 690,000 barrels of oil a day from 686,000 a year earlier. Total sales of 62 million barrels for the quarter were at the top end of the company’s forecast.
“Anadarko was probably among the worst affected by Macondo in terms of having an active area of operation slowed down,” said Philip Dodge, an analyst at Tuohy Brothers in New York. “In spite of that, they turned on enough things in other areas to do better than people expected.”
Net income fell 70 percent to $216 million, or 43 cents a share, from $716 million, or $1.43, a year earlier, when energy futures contracts boosted earnings, The Woodlands, Texas-based company said in a statement yesterday. Excluding such items as hedging losses, profit in the quarter was 72 cents a share, 14 cents higher than the average of 29 analysts’ estimates compiled by Bloomberg.
Revenue in the first quarter rose 3.6 percent from a year earlier to $3.25 billion.
Jubilee Project
Anadarko’s stock, through yesterday’s close at $80.35, had climbed 8.7 percent since April 20, 2010. That marks a comeback from a drop to less than $35 a share during June 2010 as worries swirled because the Macondo well continued to gush oil.
The company has a 25 percent stake in the Macondo well. 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.
The Anadarko decline turned out to be an overreaction, said Jeb Armstrong, an analyst at Credit Agricole Securities USA in New York who has a “buy” rating on Anadarko shares and owns none.
“The success the company has had over the last year I think is indicative of the value that the company brings to the table,” he said.
Yesterday, Anadarko said the Jubilee project in which it’s a partner off the coast of Ghana has a gross output of more than 70,000 barrels a day, heading to 120,000 barrels a day that’s expected by the third quarter.
Eagle Ford
In onshore plays in North America, Anadarko said average sales volumes rose 30 percent from the fourth quarter in the Eagle Ford shale formation, while the increase was 82 percent in the Marcellus region.
Anadarko and a Mitsui-affiliated company sued BP last month over economic losses from Macondo and the related oil spill. The companies claimed BP broke its partnership agreement and asked a federal judge to declare they aren’t responsible for damages and cleanup costs.
BP, based in London, has said it expects its minority partners in the damaged well to pay their share of billions of dollars in costs. BP asked a judge to put the lawsuits on hold, saying a joint-operating agreement requires the parties to first attempt dispute resolution through arbitration.
Macondo Invoice
Anadarko, in a regulatory filing yesterday, said BP has invoiced the company $4.7 billion for spill-related costs. The company also said it has received a notice of dispute from BP requesting payment of all invoices related to the Gulf disaster.
The notice will lead to representatives of the parties meeting with each other, according to Anadarko. If the dispute isn’t resolved within certain time periods that total 190 days, Anadarko said, any party can initiate arbitration proceedings under their operating agreement.
Dodge, the Tuohy Brothers analyst, said issues may pop up for Anadarko as the Macondo dispute lingers.
“That market is certainly saying that we shouldn’t worry too much about it, but what I think is that every six, 12 months another shoe is going to drop,” he said.
(Anadarko will hold an earnings conference call for investors and analysts today 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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