Petroleo Brasileiro Petrobras SA (ADR) (PBR), Exxon Mobil Corporation (XOM): Why Anadarko Petroleum Corporation (APC) Stands out Among Big Oil Companies

Total sales volumes stood at 750,000 barrels of oil equivalent per day, up 1% from last year. Total liquids production fell 3%, which is disappointing. Onshore domestic production was pretty impressive with the Wattenberg field sales volumes increasing 37% to 60,000 barrels per day. Close behind, the Eagle Ford Shale play yielded 32,000 barrels per day — a solid 62% growth over last year’s volumes.

In all, U.S. sales volumes — which constituted 91% of total sales — increased by 20,000 barrels per day. While this is directionally a good indicator, these shale plays aren’t the cheapest source of oil. Profitability margins may take a hit in the long run. That’s why you must pay attention to management’s efforts to explore the deepwater space which should be beneficial in the long run.

…however, deepwater comes to the rescue
Anadarko Petroleum Corporation (NYSE:APC)’s five deepwater discoveries last quarter in the Gulf of Mexico and Mozambique should look interesting to value investors. The reason why you should be interested in the deepwater space is because profitability margins are much more attractive.

The Yucatan and Raptor discoveries in the Gulf of Mexico have encountered 120 and 150 net feet of oil pay, respectively, which is awesome by industry standards. The Yucatan discovery is close to the Anadarko-operated Shenandoah discovery and the Coronado discovery in which the company owns an interest. Recently, during the appraisal of the Shenandoah discovery, the company had encountered 1,000 feet of net oil pay, which is huge and is why management is expecting a solid discovery in the Yucatan as more appraisal wells are drilled.

A Foolish bottom line
From a long-term perspective, the overall economics makes more sense in deepwater drilling. Anadarko Petroleum Corporation (NYSE:APC) seems to be on the right track in making profitability count.

The article Why Anadarko Petroleum Stands out Among Big Oil Companies originally appeared on Fool.com and is written by Isac Simon.

Fool contributor Isac Simon has no position in any stocks mentioned. The Motley Fool recommends Petroleo Brasileiro (NYSE:PBR) S.A. (ADR).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.