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Analyzing Anadarko Petroleum, the Lowest Dividend Grower

Amanda Lawrence - Author

Nov. 15 2017, Updated 1:35 p.m. ET

Why did APC’s revenues fall in 2015 and 2016?

Anadarko Petroleum’s (APC) revenues fell 53.0% in 2015 and 10.0% in 2016. APC’s oil and natural gas sales drove the decline in both years. Its natural gas liquids sales rose in 2016 after a fall in 2015.

Sales in APC’s Gathering, Processing, and Marketing segment rose in 2015 and 2016. The segment’s numbers for both years were also affected by losses on divestitures, which is a contrast to the gains on divestitures in 2014. The rate of this decline decreased in 2016 as the industry recovered.

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United States and International segments

APC’s United States and International segments recorded a significant fall in oil prices for 2015 and 2016. The segments’ sales volumes remained flat in 2016 after growing in 2015.

Natural gas prices in the US also fell significantly, leading to lower sales volumes. Natural gas liquids prices in the US were able to recover somewhat in 2016 after falling significantly in 2015. Its sales volumes were slightly affected.

International natural gas liquids prices fell significantly in 2015 and 2016. Sales volumes remained flat in 2016 after some growth in 2015.

What led to the negative EPS in 2015 and 2016?

APC’s costs and expenses rose 34.0% in 2015 before falling 40.0% in 2016. In 2015, the company recorded a substantial impairment charge. Its exploration costs also increased in 2015 before decreasing in 2016. As a result, APC’s operating income turned negative in 2015, as it fell 263.0%.

APC’s operating loss for 2016 fell 70.0%. Other expenses decreased 84.0% in 2015 before rising 40.0% in 2016. This trend resulted from a substantial amount recorded as a litigation settlement in 2014. These factors translated into 280.0% growth in the company’s negative EPS (earnings per share) in 2015.

The company’s negative EPS fell 55.0% in 2016 and remained in the negative zone, allowing its EPS to improve in 2016.

The WisdomTree US Total Dividend ETF (DTD) is a dividend ETF with exposure to Anadarko Petroleum. It has a price-to-earnings (or PE) ratio of 20.5x and a dividend yield of 2.5%.

The First Trust Morningstar Dividend Leaders ETF (FDL) is a dividend ETF with 16.0% exposure to the energy sector. FDL has a PE ratio of 19.9x and a dividend yield of 3.2%.

In the next part of this series, we’ll discuss the company’s performance in 2017. We’ll also examine its dividend and compare APC with the broad indexes (SPX-INDEX)(SPY)(DJIA-INDEX)(DIA)(COMP-INDEX)(ONEQ).


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