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Why Anadarko Increased Its Midpoint Production Guidance for 2Q16

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Anadarko’s key operational highlights

Anadarko Petroleum’s (APC) 2Q16 total production volume reached 72 MMboe (million barrels of oil equivalent). By comparison, its 2Q15 production volumes came in at 77 MMboe, and its 1Q16 production volumes amounted to 75 MMboe.

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Production mix

Anadarko has been increasing the share of its liquid production volumes. The company’s total liquid production mix in 2016 is expected to be 56%. In 2015, liquids made up 52% of APC’s production.

2Q16 realized prices

APC’s average realized price of crude oil (OIL) and condensates fell from $55.78 per barrel in 2Q15 to $41.77 per barrel in 2Q16. Its average realized price for natural gas (UNG) fell from $2.28 per thousand cubic feet in 2Q15 to $1.61 per thousand cubic feet in 2Q16. However, its average realized price for natural gas liquids increased from $18.50 per barrel in 2Q15 to $19.60 per barrel in 2Q16.

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2016 production guidance

APC provided a divestiture-adjusted 2016 production guidance range of 277 MMboe–281 MMboe. This represents a 2-MMboe midpoint increase, as compared to the previous guidance range of 275 MMBoe–279 MMboe. APC’s 2Q16 earnings release noted that this was the result of exceptionally high volumes in its Gulf of Mexico operations, combined with improved well performance in the Delaware and DJ basins. But the updated guidance range is still 8.5% lower, at the midpoint, than 2015 production levels.

By comparison, Whiting Petroleum (WLL) has provided a production growth guidance of -18% at the midpoint, and Oasis Petroleum (OAS) has provided a growth guidance of -6% at the midpoint. Concho Resources (CXO) has provided a growth range of -5%–0%. Together, these companies make up 9% of the iShares US Oil & Gas Exploration & Production ETF (IEO).

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