Anadarko Earnings Rise 33%

But at $1.22 a share, they're a penny behind estimates.
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Anadarko Petroleum's

(APC) - Get Report

second-quarter earnings rose a slightly weaker-than-expected 33% from a year ago, reflecting higher commodity prices and reduced debt and interest payments.

The Houston-based independent exploration and production company earned $506 million, or $2.12 a share, on revenue of $1.59 billion. This compares with last year's net income of $405 million, or $1.59 a share, on revenue of $1.44 billion.

Results were a penny shy of the average analyst estimate compiled by Thomson First Call.

"Our restructured portfolio delivered higher margins, as revenues climbed 10% on strong net realized oil and natural gas prices while overall costs fell, including a 24% decline in interest expense due to a $1.4 billion reduction in total debt compared with last year's second quarter," the company said in a release.

Cash flow from operating activities was $795 million in the second quarter of 2005, which is down from last year's $880 million, reflecting an overall decrease in production volume due to property sales.

The company said that adjusting for these property sales, volume increased more than 10% year over year.

Over the past year, the company has restructured its asset base by selling about $3.5 billion of non-strategic properties, retiring $1.4 billion in debt and repurchasing $1.7 billion of common stock.

The net debt-to-capital ratio has been reduced to 22%, from 34% last year.

Anadarko expressed optimism regarding its international projects, which include offshore North Africa, West Africa, the Georgia Black Sea, Qatar, Indonesia, onshore Algeria and Tunisia, as well as the LNG project in Nova Scotia. "We are very encouraged by the success we've seen through midyear and expect to continue executing the refocused strategy we initiated last summer."

It did not provide guidance for the rest of the year or beyond, though in a June 22 report the company said it was on track to deliver 5% to 9% in annual production growth, 4% to 6% in annual reserve growth, and 6% to 10% in annual cash-flow growth through 2009.

Capital expenditures for 2005, according to the June report, are estimated to range between $3.1 billion and $3.3 billion.

Shares of Anadarko rose $1.5, or 1.7%, to $90.50 in Instinet trading.