Earnings Preview For Anadarko Petroleum (APC, BP, CCL, RIG, MITSY)

Anadarko Petroleum APC is expected to announce a temporary setback in its earnings on Monday, May 2, when the company is due to publish its Q1 earnings report. Analysts are predicting earnings per share will fall by 28.9% to $0.59, from the previous year's level of $0.83. Revenues are expected to fall as well, although at a much slower pace. Analysts predict Q1 revenues will be $3.09 billion, down 1.4% from the previous year's level of $3.14. Anadarko Petroleum is an independent oil and natural gas exploration and production company. As of December 31, 2010, the company had $2.4 billion barrels of oil equivalent of proved reserves. Anadarko's portfolio of assets includes positions in onshore resource plays in the Rocky Mountains region, the southern United States and the Appalachian basin. Anadarko operates in three operating segments: oil and gas exploration and production, midstream, and marketing. In spite of expected falls in earnings per share and revenues for this quarter, the long-term outlook still seems to be positive. Analysts expect revenues to pick up in the rest of the year. The projections for Q2 put revenues at $3.23 billion and earnings per share at $0.69, which represents a yearly increase of 24% and 40.8% respectively. For the year as a whole, Anadarko's revenues should be 18.1% higher, while earnings per share are predicted to increase by 58.2%. Many factors can spoil a pretty rosy picture for the rest of the year, however. One thing will definitely come to investors' mind – Deepwater Horizon. BP BP is the main culprit, but Anadarko is his accomplice, at least that is how Carnival CCL sees it. The cruise and vacation giant has recently filed a lawsuit against BP, Transocean RIG, Anadarko and a number of other oil and gas companies. Carnival is just one of the more recent companies trying to switch the costs of lower revenues, due to the oil spill disaster, onto oil companies. It seems that ecological catastrophe might be over, but the legal catastrophe for BP and other companies involved in the case will probably not end soon. Anadarko is not only being sued over Deepwater Horizon; oil spill's “bad guys” are suing each other as well. Recently, BP asked a federal judge to put on hold its oil spill-related litigation with Anadarko and Mitsui MITSY, its minority partners in the Deepwater Horizon project, according to San Francisco Chronicle. BP argues that Anadarko and Mitsui's claim for compensation should be resolved through arbitration, as was a part of an agreement signed between the companies before the oil spill disaster. Since BP has already initiated the arbitration process, it sees no reason for the lawsuit on the part of its business partners. Investors will not only be closely watching the outcomes of court battles. Equally intriguing battles are being waged in the Arab world. So far, the conflict has taken out only one big producer of oil, namely Libya. As the protests continue in a number of countries, investors might fear that further disruptions in supply might follow. Investors should not only fear a fall in supply. There are reasons to fear a cutback in the demand for oil as well. The global recovery is on very shaky grounds, as a recent slowdown in the US growth clearly illustrates. With inflation creeping up in many developed countries, some central banks, like ECB, had already started increasing the interest rates, which might further slow the recovery. Slower growth, on the other hand, might push the oil prices down, eating away the profits of companies like Anadarko. On Thursday, Anadarko's shares ended at $78.64. In the last 30 days, its shares have lost 4.17% of their value.