Anadarko Petroleum's stock has jumped 8% over the past five days, but it's only up 1.8% year to date and down 46% over the past year. Exacerbating APC's predicament, however, is the massive debt burden on its balance sheet. The company's debt-to-equity ratio now stands at 1.22, which tells us that the company is primarily financing operations with borrowed money.
During the go-go days leading up to the energy price collapse, Anadarko took advantage of low interest rates and high prices to finance aggressive expansion. Now, interest rates are rising (albeit slowly) and energy prices are still about 61% off their highs in the midsummer of 2014.
After selling off several underperforming assets, Anadarko is becoming a pure play on North American shale production via its assets in Wattenberg, Eagle Ford and the Delaware Basin.
Anadarko has curtailed spending, stopped investing in future production and is living on fumes.
The consensus EPS forecast for Q1 is a loss of $1.18 per share, compared with a year-earlier loss of 72 cents a share.