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What's in Store for Anadarko Petroleum (APC) in Q3 Earnings?

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Anadarko Petroleum Corporation will release third-quarter 2017 financial results after the market closes on Oct 31. In the prior quarter, the oil and gas company reported a negative earnings surprise of 126.47%. Let’s see how things are shaping up at the company prior to this announcement

Factors to Consider

Anadarko Petroleum reaffirmed production guidance range for the deepwater Gulf of Mexico (GOM), DJ and Delaware basin assets. In GOM and Delaware and DJ basins, the company expects average production rates to be 130,000 barrels of oil per day (BOPD) and 150,000 BOPD respectively for full-year 2017.

During the second quarter, the U.S. operations have been the major contributor in both Oil and Natural gas production. We can expect the same in the current quarter as well. The company's high quality assets and infrastructure will help it to come out with strong performance, despite challenges caused by Hurricane Harvey.

The Zacks Consensus Estimate for total sales volume stands at 59 million barrels of oilequivalent (MMBOE) for third quarter that is within the company’s guidance range of 58-60 MMBOE.

Similarly the Zacks Consensus Estimate for total average daily volumes is currently pegged at 643,000 barrels of oil equivalent per day(BOE/d)and has exceeded the announced guidance range of 630,000-652,000 BOE/d.

Additionally, the Zacks Consensus estimate for total average daily volumes in the United Statesfor natural gas for the current quarter is pegged at 1,122 million cubic feet per day (MMcf/d),marginally exceeding the company’s guidance range of 1,085-1,120 MMcf/d.

The company has no control over the fluctuating commodity prices that have dropped from the highs reached in the first half of 2017. The third quarter Zacks Consensus Estimate for total revenues is $2,316 million, which reflects a sequential decline of 14.7% accommodates a likely drop in commodity prices. We expect the drop in commodity prices could impact performance of the company.

Earnings Whispers

Our proven model does not show that Anadarko Petroleum is going to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: Anadarko Petroleum has an Earnings ESP of -2.07%. This is because the Most Accurate estimate stands at a loss of 57 cents, wider than the Zacks Consensus Estimate of a loss of 56 cents.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Though Anadarko Petroleum’s Zacks Rank #3 increases the predictive power of the ESP, however its negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider                   

Anadarko Petroleum does not have the right parameters to come out with earning surprise this season. However, we have a few players in the industry, which have the right combination of elements to post an earnings beat this quarter.

Noble Midstream Partners LP has an Earnings ESP of +4.96% and a Zacks Rank #1. It is slated to report third-quarter 2017 earnings on Oct 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cheniere Energy, Inc. (LNG - Free Report) has an Earnings ESP of +2,500% and a Zacks Rank #3. It is expected to report third-quarter 2017 earnings on Nov 14.

Apache Corporation (APA - Free Report) is expected to report third-quarter 2017 earnings on Nov 2. It has an Earnings ESP of +13.07% and a Zacks Rank #3.

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