Anadarko Petroleum Corporation reported second-quarter 2016 adjusted loss of 60 cents per share, narrower than the Zacks Consensus Estimate of a loss of 77 cents. In the year-ago quarter, the company had recorded earnings of a penny.

On a GAAP basis, Anadarko Petroleum registered a loss of $1.36per share in the second quarter of 2016. In the prior-year comparable period, it had reported GAAP earnings of 12 cents. The difference between the GAAP and adjusted figures was due to an additional one-time loss of 76 cents, affecting comparability.

Total Revenue        

In the reported quarter, Anadarko Petroleum’s revenues of $1,915 million missed the Zacks Consensus Estimate of $1,951 million by 1.9%. Revenues, however, plunged 27.4% year over year.

Operational Highlights

In the reported quarter, Anadarko Petroleum's average daily sales volume declined 6.4% to 792,000 barrels of oil equivalent per day (BOE/d).

Quarterly sales volume for natural gas was 2,188 million cubic feet per day (MMcf/d), down 7.1% from the year-ago quarter figure of 2,354MMcf/d. Crude oil and condensate, and NGL sales volumes were 296 thousand barrels per day (MBbls/d) (down nearly 7%) and 131MBbls/d (down 3.7%), respectively.

Anadarko Petroleum’s total costs and expenses declined 11.7% year over year to $2,247 million primarily due to lower exploration, operating and transportation expenses,as well as lower depreciation,depletion and amortization.

Interest expenses amounted to $217 million, up nearly 8% from $201million incurred a yearago due to a rise in long-term debt.

Financial Condition

Anadarko Petroleum had cash and cash equivalents of $1,394 million as of Jun 30, 2016, substantially up from $939 million as of Dec 31, 2015.

Long-term debt as of Jun 30, 2016 was $15,641 million, up from $15,636 as of Dec 31, 2015.

Anadarko Petroleum's net cash from operating activities during the quarter was $1,229 million, compared with $1,243 million in the prior-year period.

In the reported quarter, the company’s capital expenditure was $728 million, down from $1,401 million in the year-ago quarter.

Guidance

Anadarko expects average daily sales volumes of 739,000–761,000 BOE/d for third-quarter 2016 and 757,000–768,000 BOE/d for the full year.

The company expects capital expenditure to be $650–$750 million in the third quarter and $2,600–$2,800 million in 2016.

Upcoming Peer Releases

Devon Energy Corporation (DVN Quick QuoteDVN - Free Report) is scheduled to report on Aug 2, after the market closes. The Zacks Consensus Estimate stands at a loss of 23 cents.

Noble Energy, Inc. is scheduled to report on Aug 3, before the market opens. The Zacks Consensus Estimate stands at a loss of 32 cents.

WPX Energy, Inc. is scheduled to report on Aug 4, before the market opens. The Zacks Consensus Estimate stands at a loss of 21 cents.

Our View

Anadarko Petroleum has lowered its capital expenditure guidance for both the third quarter and the full year. The company has also been able to bring down total costs and expenses. This will help improve its cash margins and enhance the portfolio value amid the present volatility in oil prices. Note that oil prices had been witnessing an uptrend on reports of an inventory drawdown, which was, however, followed by a decline, after oil producers reportedly resumed drilling. A strengthening dollar and sluggish demand in India and China add to its woes. Thus, the market may see another round of oil supply glut in the absence of a factor that can rebalance demand and supply.

Anadarko Petroleum currently carries a Zacks Rank #2 (Buy).

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