Anadarko Swings to 4th-Quarter Profit; Revenue Falls

Anadarko Petroleum Corp. swung to a fourth-quarter profit on a jump in oil and gas sales amid a major production surge, compared with a prior year when it was also hit by charges tied to the 2010 Deepwater Horizon oil spill.

Anadarko reported that oil and natural gas sales volume jumped 8% in 2012, driven by an even larger increase in sales volume from U.S. shale fields such as the Eagle Ford in south Texas and the Wattenberg in northeast Colorado. The company has also had a string of exploration successes off the coast of Mozambique.

For the fourth quarter, Anadarko reported a profit of $203 million, or 40 cents a share, compared with a year-earlier loss of $358 million, or 72 cents a share. The year-earlier quarter reflected the partial impact of a $4 billion settlement Anadarko paid to U.K. oil company BP PLC to settle claims related to the Deepwater Horizon oil spill. Anadarko owned a 25% stake in the blown-out well that was operated by BP.

Excluding the impact of the BP settlement and other items, per-share earnings rose to 91 cents from 85 cents. Revenue fell 11% to $3.41 billion.

Analysts polled by Thomson Reuters were expecting per-share earnings of 71 cents on revenue of $3.38 billion.

RBC Capital Markets analyst Scott Hanold wrote in a client note that Anadarko's production was better than expected.

Anadarko's sales volume reached 68 million barrels of oil equivalent, up from 63 million barrels of oil equivalent a year earlier and flat with the previous quarter. Full-year sales also rose 8% to 268 million barrels of oil equivalent. Chief Executive Al Walker said in the company's earnings release that the company increased sales volume of "higher margin liquids" by 25,000 barrels per day over 2011, but revenue from oil and natural-gas liquids sales declined from a year earlier as selling prices fell.

Anadarko is the largest foreign oil producer in Algeria, where last month's attack on the In Amenas gas field prompted questions about the safety of operating in the region. Anadarko said in its earnings announcement Monday that it expects its massive El Merk project in the eastern Sahara to achieve initial oil production during the first quarter of 2013.

The energy producer has said capital spending won't increase along with projected sales as it works to reduce costs. Anadarko in January sold an interest in soda-ash producer OCI Wyoming LP for about $292.5 million.

The company said it added 434 million barrels of oil equivalent of proved reserves in 2012, replacing 162% of the oil and gas it produced during the year.

Copyright (c) 2012 Dow Jones & Company, Inc.


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