Anadarko Losses Worse Than Expected as Big Oil Pains Linger

  • Shortfall of $515 million was almost double average estimate
  • Company follows Exxon and Chevron in missing expectations

Anadarko Petroleum Corp. followed Exxon Mobil Corp. and Chevron Corp. in missing Wall Street earnings expectations for 2016’s final quarter, in another sign that the oil industry’s financial pain isn’t over.

The driller reported a quarterly loss that narrowed from the previous year but was still about twice what analysts had expected. In a statement Tuesday, Anadarko said it was moving ahead with plans to unload billions of dollars worth of assets and focus on more profitable oilfields in West Texas and the Rocky Mountains.

The rebound in crude prices since November has brightened the outlook for U.S. explorers like Anadarko after the industry laid off thousands of workers and slashed drilling budgets last year to survive. Still, it’s too early to say how much the rally will help, said Brian Youngberg, an Edward Jones & Co. analyst in St. Louis.

“The consensus is for a small profit now this year," Youngberg said in an e-mail before the Anadarko announcement. “They are still negatively impacted, but obviously not like it was in ’15 and ’16."

Prices for West Texas Intermediate crude have risen about 17 percent since the Organization of Petroleum Exporting Countries agreed to cut supplies to ease a two-year market rout at the end of November. Russia and other major producers agreed to join the effort in December.

Anadarko lost $515 million, or 94 cents a share, in the fourth quarter, an improvement over a loss the year earlier of $1.25 billion, or $2.45 a share, Anadarko said in its statement. The company was expected to post a loss of about $265 million, according to the average of 21 analysts’ estimates compiled by Bloomberg.

Fourth-quarter sales climbed to $2.39 billion from $2.12 billion a year earlier.

Asset Sales

Anadarko has been selling assets to cut costs and focus on the Permian Basin in West Texas and the D-J basin in Colorado, where the company says it can make money even at lower oil prices, as well as deepwater production in the Gulf of Mexico. The Woodlands, Texas-based explorer has sold or announced the sale of more than $7.5 billion in drilling rights since the start of 2016.

The company has “strong momentum going into 2017," Chief Executive Officer Al Walker said in the earnings report. “Anadarko is in a better position today to deliver value than at any time in my tenure with the company."

The company fell 1.5 percent to $68.48 at 11:09 a.m. in New York. Before today, the shares had climbed 78 percent in the past 12 months, as crude prices rebounded from a 12-year low.

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