Common-Size Income Statement

Anadarko Petroleum Corp., common-size consolidated income statement

12 months ended:	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012
Oil sales	55.26%	57.14%	59.53%	61.73%	65.59%
Natural-gas sales	18.52%	21.16%	23.51%	22.79%	18.37%
Natural-gas liquids sales	10.90%	8.78%	9.60%	8.49%	9.20%
Gathering, processing and marketing sales	15.32%	12.92%	7.36%	6.99%	6.85%
Sales revenues	100.00%	100.00%	100.00%	100.00%	100.00%
Oil and gas operating	-9.60%	-10.69%	-7.15%	-7.35%	-7.33%
Oil and gas transportation	-11.86%	-11.78%	-6.82%	-6.60%	-7.18%
Gathering, processing and marketing	-12.87%	-11.11%	-6.29%	-5.85%	-5.73%
Cost of sales revenues	-34.33%	-33.58%	-20.26%	-19.79%	-20.24%
Gross profit	65.67%	66.42%	79.74%	80.21%	79.76%
Gains (losses) on divestitures and other, net	-6.84%	-8.31%	12.79%	-1.92%	0.78%
Exploration	-11.20%	-27.87%	-10.01%	-8.94%	-14.62%
General and administrative	-17.05%	-12.40%	-8.04%	-7.33%	-9.36%
Depreciation, depletion, and amortization	-50.92%	-48.52%	-27.79%	-26.41%	-29.79%
Production, property, and other taxes	-6.35%	-5.83%	-7.60%	-7.24%	-9.20%
Impairments	-2.69%	-53.50%	-5.11%	-5.34%	-2.92%
Other operating expense	-1.40%	-2.86%	-1.01%	-0.60%	13.37%
Operating income (loss)	-30.77%	-92.86%	33.00%	22.42%	28.01%
Interest expense	-10.54%	-8.70%	-4.71%	-4.61%	-5.58%
Loss on early extinguishment of debt	-1.83%	0.00%	0.00%	0.00%	0.00%
Gains (losses) on derivatives, net	-3.39%	1.04%	-1.20%	2.68%	2.45%
Other income (expense), net	1.20%	-1.57%	-0.12%	-0.60%	0.03%
Tronox-related contingent loss	0.00%	-0.05%	-26.63%	-5.72%	1.88%
Other income (expense)	-14.56%	-9.28%	-32.67%	-8.25%	-1.22%
Income (loss) before income taxes	-45.33%	-102.14%	0.33%	14.17%	26.79%
Income tax (expense) benefit	12.09%	30.33%	-9.87%	-7.84%	-8.42%
Net income (loss)	-33.24%	-71.81%	-9.55%	6.33%	18.37%
Net (income) loss attributable to noncontrolling interests	-3.11%	1.27%	-1.14%	-0.94%	-0.41%
Net income (loss) attributable to common stockholders	-36.36%	-70.55%	-10.69%	5.39%	17.97%

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The common-size income statement reveals a significant deterioration in profitability and a shift in the revenue mix between 2012 and 2016. While the company maintained strong margins in the early part of the period, it experienced a severe financial contraction starting in 2015, characterized by massive impairment charges and increased operating costs.

Revenue Stream Diversification: A gradual shift in the composition of sales revenues is observed. Oil sales, previously the dominant driver at 65.59% of revenues in 2012, declined steadily to 55.26% by 2016. Conversely, revenues from gathering, processing, and marketing sales more than doubled, increasing from 6.85% to 15.32% over the same period. Natural gas sales peaked in 2014 at 23.51% before returning to 2012 levels (18.52%) by 2016.
Cost Structure and Gross Profitability: The cost of sales revenues remained relatively stable at approximately 20% of sales from 2012 to 2014. However, a sharp increase occurred in 2015 and 2016, with costs rising to 33.58% and 34.33%, respectively. This upward trend in direct costs resulted in a contraction of gross profit, which fell from a peak of 80.21% in 2013 to 65.67% in 2016.
Operating Expense Trends: Operating expenses exhibited extreme volatility and an overall upward trend relative to revenue. General and administrative expenses increased steadily from 9.36% in 2012 to 17.05% in 2016. Depreciation, depletion, and amortization (DD&A) saw a dramatic escalation, jumping from an average of approximately 27% between 2012 and 2014 to over 50% in 2015 and 2016. Additionally, a critical impairment event occurred in 2015, where impairment charges consumed 53.50% of sales revenues.
Operating and Net Income Volatility: Operating income transitioned from a healthy range of 22.42% to 33.00% (2012–2014) to a catastrophic loss of 92.86% in 2015, before partially recovering to a loss of 30.77% in 2016. This volatility was further compounded by non-operating items, most notably a Tronox-related contingent loss that peaked at 26.63% of revenues in 2014.
Bottom Line Performance: The net income attributable to common stockholders reflects a trajectory of collapse. The company moved from a net profit margin of 17.97% in 2012 to a net loss of 70.55% in 2015. By 2016, although the loss narrowed to 36.36%, the company remained far below its historical profitability levels. This decline was exacerbated by an increase in interest expenses, which rose from 5.58% in 2012 to 10.54% in 2016, indicating higher leverage or increased borrowing costs relative to revenue.

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Anadarko Petroleum Corp. (NYSE:APC)

Common-Size Income Statement