Anadarko Petroleum Corp. (NYSE:APC)

The analysis of financial ratios over the five-year period reveals several notable trends in revenue composition, cost structure, profitability, and expenses.

Revenue Composition

Oil sales as a percentage of total sales revenues steadily decreased from 65.59% in 2012 to 55.26% in 2016, indicating a declining reliance on oil revenue. Natural-gas sales showed growth early in the period, peaking at 23.51% in 2014 before declining to 18.52% by 2016. Natural-gas liquids sales remained relatively stable but increased to 10.9% in 2016. Gathering, processing, and marketing sales demonstrated a consistent increase, nearly doubling from 6.85% in 2012 to 15.32% in 2016, suggesting diversification in revenue streams.

Cost Structure

Cost of sales revenues, including oil and gas operating, transportation, and gathering expenses, rose considerably, almost doubling from around 20% in 2012 to over 34% in 2016. The sharp increase after 2014 is especially pronounced. Depreciation, depletion, and amortization expenses also increased substantially from 29.79% in 2012 to over 50% in 2016, reflecting either higher asset base or accelerated amortization policies. Exploration costs were volatile, spiking dramatically in 2015 to 27.87%, then falling back to 11.2% in 2016. General and administrative expenses similarly escalated from 9.36% to 17.05%, indicating rising overhead costs. Production, property, and other taxes decreased slightly, stabilizing around 6% by 2016.

Profitability and Income Measures

Gross profit margins remained relatively stable around 80% until 2014 but experienced a marked decline to about 66% in 2015 and 2016, likely reflecting increased operating costs. Operating income showed volatility, peaking at 33% in 2014 then plunging dramatically into negative territory at -92.86% in 2015 and -30.77% in 2016, signaling severe operational challenges. Income before taxes followed a similar pattern, deteriorating sharply to -102.14% in 2015 and improving somewhat to -45.33% in 2016 but remaining negative. Net income mirrored these trends, turning negative in 2014 and worsening in subsequent years to -33.24% in 2016, indicating net losses.

Other Income and Expenses

The company experienced fluctuating gains and losses on divestitures and derivatives, with significant positive impact in 2014 but losses in other years. Interest expenses increased, reflecting possibly higher debt levels or rising interest rates, moving from 5.58% in 2012 to 10.54% in 2016. Loss on early extinguishment of debt appeared in 2016 at -1.83%, contributing to expense load. Notably, there were large impairments accounting for a substantial negative item especially in 2015 at -53.5%, significantly affecting the bottom line. Contingent losses related to Tronox were significant negative factors during 2013 and 2014 but diminished afterward.

Summary

The data indicates a shift in revenue sources with reduced dependence on oil sales and increased contributions from gathering and processing activities. Rising costs and impairment charges have eroded profitability, culminating in negative operating and net income in recent years. The sharp increase in depreciation and impairment expenses points to challenges in asset valuation and utilization. The company also faced increasing financial burdens from interest and administrative expenses. Overall, the financial trends suggest operational and financial pressures intensifying after 2014, with emerging diversification strategies in revenue juxtaposed against deteriorating profitability metrics.