Anadarko Petroleum Corp.'s efforts to reshape U.S. operations around oil production are paying off, with the company reporting better-than-expected earnings and laying out a capital plan to return more cash to investors.
During the company's quarterly earnings call Feb. 7, CEO Al Walker said Anadarko's pivot to emphasizing liquids production spurred the improvement. The company's operations in Colorado's DJ Basin and the Delaware region of the Permian Basin in West Texas "exceeded their year-end exit rate targets with assets producing at record levels," Walker said. "This performance, when combined with our Gulf of Mexico and international assets, produced a higher overall liquids mix, largely oil-driven, which materially improved our cash margin."
"In 2017, we achieved upstream capital investments inside of our discretionary cash flow and total Anadarko capital investing inside of guidance. This type of capital efficiency has us very well positioned for 2018," he continued.
With improved operational efficiencies since selling off about $7 billion of "gas-centric" assets since 2016 and oil prices back on the rise, the company finds itself in a favorable position for long-term growth, Walker said. "Our portfolio is poised to deliver an improving liquids mix, driven by high-margin oil growth. As we have repeated many times over the years, growth is now part of our capital allocation process, and our portfolio offers compelling returns given its material, scalable assets and strategic infrastructure options."
He said that as part of its revamp, Anadarko will emphasize returning cash to shareholders with a quintupling of its dividend to 25 cents per share quarterly and an expanded $3 billion stock buyback program. One thing the company is not interested in now, however, is growth into new areas. "We are very happy with what our program can deliver on our three principal areas of investing: Delaware, DJ and deepwater Gulf of Mexico."
Anadarko reported net income of $106 million, or 18 cents per share, for the fourth quarter of 2017, up from a net loss of $272 million, or a loss of 50 cents per share, during the fourth quarter of 2016. The S&P Global Market Intelligence consensus normalized EPS estimate for the quarter was 9 cents.
