Anadarko Petroleum Corp.’s domestic gas sales grew 65% in the second quarter from the year-ago period while realized gas prices increased 12.5%, contributing to a hefty revenue surge. However, net income was down for the quarter, $652 million ($1.39/share) versus $814 million ($1.76/share), a 20% decline blamed in large part on income taxes associated with divestitures as well as higher interest expense.
Revenue was up 83% to $3.3 billion from $1.8 billion in second quarter 2006 on higher commodity sales volumes. Analysts had expected earnings of 79 cents/share on revenue of $2.5 billion.
Anadarko shares closed up 23 cents at $50.33 in trading Tuesday that was one-third more active than normal.
Anadarko has spent the past year digesting the acquisitions of Kerr-McGee Corp. and Western Gas Resources Inc. (see Daily GPI, June 26, 2006), paring acquisition debt through divestitures and increasing its focus on natural gas (see Daily GPI, April 17).
“We are pleased with our second quarter operating and financial results,” said CEO Jim Hackett. “Our retained properties are performing very well. Based on the demonstrated performance of the portfolio, combined with our expectations from Independence Hub [see Daily GPI, July 23], we are raising the production guidance for our continuing portfolio again, to between 189 MMboe and 193 MMboe for the year — an increase of 3 MMboe from the previous midpoint.”
During the second quarter Anadarko sold nearly 1.8 Bcf/d at $7.10/Mcf including hedges. In second quarter 2006 the company sold 1.09 Bcf/d at $6.31/Mcf. For the first half of 2007 Anadarko has nearly doubled domestic gas sales volumes, to 2 Bcf/d from 1.09 Bcf/d in the year-ago period. However, realized prices were down at $6.18/Mcf from $6.94/Mcf in the year-ago period.
In the second quarter hedging added 96 cents to realized gas prices, up substantially from its 11-cent contribution in the year-ago period. However, for the first half of 2007 hedging trimmed prices by one cent while it contributed 11 cents in the first half of 2006.
Natural gas liquids sales volumes also were up for the quarter and first half, rising to 47,000 b/d from 38,000 b/d in second quarter 2006. For the first half of the year sales were 48,000 b/d, up from 35,000 b/d a year ago. Realized prices were $41.88/bbl in the second quarter, up from $39.66/bbl a year ago, and $38.73/bbl in the first half, down from $39.32/bbl a year ago.
Income tax payments associated with divestitures were $1.1 billion during the second quarter. Interest expense was up sharply in the second quarter, $314 million compared to $51 million a year ago. For the first half of the year interest expense was $624 million, up from $104 million in the year-ago period.
Net income for the first half was $756 million ($1.62/share), down sharply from more than $1.47 billion ($3.18/share) a year ago.
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