Interim Reports Mixed for Oil Companies (APC, MMR, CVX)

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Energy companies are focusing on just a couple of things as they head into earnings season. First is debt and financing; second is production, especially for those companies who suffered from Hurricanes Gustav and Ike.  Anadarko (NYSE:APC) and McMoRan (NYSE:MMR) have shown key updates and Chevron (NYSE:CVX) is on deck to do so.

Anadarko, which plans to release earnings November 4th,reported today that it has completed a $600 million share buyback andretired about $650 million in floating-rate notes. The company’s CFOnoted that Anadarko had about $1.9 billion in cash at the end ofSeptember. That’s about triple its cash it had as of the end of the Junequarter. Putting cash under the mattress has moved Anadarko’s shareprice up about 2% in early trading today.

McMoRan, a much smaller company than Anadarko, was hit hardby Hurricane Ike. The company lost about 3% of production at about 2%of reserves. That’s not the problem. Downstream of McMoRan’s platformsare third-party pipelines and processing plants that have not come backonline following the storms. The company is producing less than 50% ofthe gas it did before the storms, about 140 million cubicfeet/day.

The company expects production to increase in the fourth quarter,but reach only about 180 million cubic feet/day.Original estimates totaled 290 million cubic feet/day. McMoRan alsoestimates that it will take a charge of approximately $150 million forstorm damage and future abandonment costs. It also has $160 million incash and a revolving credit facility for $450 million, all of which isavailable. The company plans to report earnings on October 20th.

McMoRan’s share price is up a little more than 2% this morning, afterfalling sharply at market open. The uptick is probably due to the Fedannouncement on its plans to purchase commercial paper. The stock wasoff nearly a buck at one point this morning.

Chevron is announcing its interim results Thursday after themarket closes. The company has not said anything about storm damage or lostproduction, and it has sold all its fuel marketing business in WestAfrica and Nigeria. At the end of the June quarter, Chevron had morethan $8 billion in cash and less than $6 billion in long-term debt. Forthe third quarter, its cash flow is likely to be down because crudeprices are down, but refining margins should be better than lastquarter for the same reason.

Paul Ausick
October 7, 2008