Anadarko Petroleum Corporation (APC, Financial), last week, announced the financial results for the third quarter 2014. These results include certain items typically excluded by the investment community in published estimates. In total, the net income increased approximately $487 million, on an after-tax basis. The cash flow from operating activities in the last quarter was approximately $2.323 billion.
Third-Quarter 2014 Highlights:
- Increased year-over-year liquids sales volumes by more than 110,000 barrels per day on a divestiture-adjusted basis
- Closed approximately $1.2 billion of additional asset monetizations
- Doubled year-over-year oil sales volumes in the Wattenberg field
- Expanded the company's "high-confidence" area in the Wolfcamp Shale oil opportunity
Management Comments:
"Anadarko delivered another outstanding quarter with year-over-year liquids sales-volume growth of 35 percent on a divestiture-adjusted basis, approximately $1.2 billion of new asset monetizations and enhanced cash margins per barrel," said Al Walker, Anadarko Chairman, President and CEO. "The impressive results from our operating activities enable us to increase our 2014 full-year sales-volume expectations for the third time this year, to a new range of 304 to 306 million BOE. The significant liquids sales-volume growth was primarily driven by the excellent results of our Wattenberg horizontal program, where oil volumes doubled relative to the third quarter of last year. We believe the depth and flexibility of our portfolio, along with our efficient allocation of capital and commitment to value acceleration will enable us to continue delivering differentiating value to our shareholders."
Operational Performance:
The last quarter of the current fiscal year saw the company’s volumes of crude oil, natural gas and natural gas liquids (NGLs) rise a great deal to an all time high of 78 million BOE, or an average of 849,000 BOE per day. The growth in higher-margin liquids sales volumes significantly improved the overall product mix to 51 percent liquids in the third quarter of 2014 versus 43 percent in the third quarter of 2013.
The strong growth in the current quarter was fueled by the strong performances in the Wattenberg field. This in return continued to help the company’s cause to go for midstream expansions and achieved year-over-year sales-volume growth of 88,000 BOE per day, averaging 189,000 BOE per day for the quarter.
The company also continued to advance multiple mega projects during the quarter. In the Gulf of Mexico, the Lucius project is scheduled to begin functioning in the coming weeks. Construction on the Heidelberg spar hull was completed, and the project remains on schedule for first oil in 2016. In Mozambique, the Parliament passed enabling legislation during its last session of the year.
To Conclude:
The company ended the quarter with approximately $8.3 billion of cash on hand, with the increase driven by asset monetizations. In addition to closing the previously announced $1.075 billion sale of its China subsidiary, the company signed and closed several additional monetizations during the quarter totaling approximately $1.2 billion. Among the new monetizations, Anadarko closed a carried-interest agreement in the emerging Eaglebine play of Central Texas and divested its non-operated interest in the Vito discovery. The company also closed the sale of its interest in a portion of the Utica Shale play in central Ohio, as well as several other transactions. With more than enough cash on hand and brilliant restructuring and recapitalization programs, the company is sure to be going good for at least another quarter. For short term returns and benefits from the stock I would put my money on APC.
