Anadarko stock falls after firm misses target
Earnings of Anadarko Petroleum Corp. fell short of analysts expectations in the fourth quarter, as prices for natural gas liquids tanked and the company spent big on oil basins in West Texas and Colorado.
The Woodlands company reported a fourth-quarter profit $102 million, a decline of 89 percent from $976 million in the fourth quarter of 2017. Analysts’ estimates had the oil and gas company's adjusted per-share earnings at 61 cents, but the Anadarko reported earnings of 38 cents per share.
Anadarko Chief Executive Al Walker, in a call with investors Wednesday morning, pinned the blame for the disappointing quarter on a “significant and rapid” decline in commodity prices in the fourth quarter, specifically natural gas liquids prices. NGL sales were down almost 19 percent for the year compared to 2017.
The company’s stock tumbled on the news, falling more than 7 percent to close $45.45 a share.
Anadarko recently signed contracts with Tokyo Gas Co. and Shell to shore up a proposed liquefied natural gas terminal in Mozambique. The deal brings it a step closer to building the first onshore LNG plant in the country at a time when global LNG demand is ex-
pected to rise. Tokyo Gas is among the world’s largest purchasers of liquefied natural gas. During the earnings call Wednesday morning, Walker said the project, which is nearing a final investment decision, will have a “game-changing impact” on the company for decades. Anadarko CEO Al Walker cited “significant and rapid” decline in commodity prices that hurt the company. Anadarko's deal with Shell is a 13-year agreement with one of its subsidiaries to buy 2 million metric tons of liquefied natural gas from the Mozambique LNG project. Combined with its previously announced agreements, Anadarko now has agreements to supply customers with 7.5 million metric tons of LNG per year.
Anadarko, which has 4,400 employees, also saw expenses jump by 19 percent in the last quarter as it expanded operations and increased spending on oil and gas transportation.
The company, along with other operators in the Denver-Julesburg Basin in Colorado, have faced regulatory headwinds in the state as new Gov. Jared Polis and the Colorado legislature consider the impact of rising oil and gas production. Company executives said Wednesday that Colorado and the DJ Basin remain important parts of the company's portfolio and there are no discussions to sell the assets.
Anadarko has 10 rigs in the Delaware Basin, the western lobe of the larger Permian Basin, and four in the DJ Basin. In West Texas, Anadarko’s Delaware Basin oil sales volume averaged 75,000 barrels per day, with total volume averaging 127,000 barrels of oil equivalent per day, in the fourth quarter. In Colorado, assets averaged 102,000 barrels of oil per day, with total volume averaging 272,000 barrels of oil equivalent per day.