Anadarko Petroleum Corporation (APC) recently reported its third-quarter results, which disappointed investors because the company's adjusted profit of $0.82 per share came in below the consensus estimate by $0.02 per share. However, because investors focused on that number, they missed several others that suggested Anadarko's quarter was much stronger than the headline number. That makes its post-earnings sell-off look like a compelling opportunity to consider buying. 

37%: U.S. onshore oil production growth

Anadarko Petroleum produced an average of 175,000 barrels of oil per day (BPD) from its U.S. onshore assets, which was 37% higher than the year-ago period and a record for the company. Fueling the company's production surge was its position in the Delaware Basin, where output rocketed 83% to 70,000 BPD. One factor driving that growth was the company's investments to build and secure the infrastructure needed to get its oil to market centers, which is proving to be a competitive advantage in an area where pipelines are filling up fast.

Rows of oil pumps under a twilight sky.

Image source: Getty Images.

58%: Margin-per-barrel growth

The surge in oil production, along with higher commodity prices as well as lower costs thanks to improved infrastructure access, helped boost Anadarko's margins to $33.68 per barrel of oil equivalent during the third quarter. That's 58% higher than what the company earned per barrel in the year-ago quarter.

$1.65 billion: Cash flow from operations

That big improvement in margins enabled Anadarko Petroleum to generate $1.65 billion in cash flow from operations during the quarter. That was more than enough money to cover the $1.075 billion the company invested in capital projects in the third quarter, leaving it with ample excess cash to continue paying down debt and returning money to shareholders.

$625 million: Cash returned to investors

Overall, Anadarko sent its investors $625 million in cash last quarter, including paying $125 million in dividends and repurchasing $500 million in shares. The company has now spent $3.5 billion to buy back stock since the end of last year, retiring 10% of its shares outstanding. Anadarko still has $500 million remaining on its current $4 billion buyback program, which it expects to complete by the middle of next year.

A barrel of oil coming through money.

Image source: Getty Images.

$4.65 billion: Midpoint of its 2018 capital budget

Anadarko said that it still plans to spend between $4.5 billion and $4.8 billion on capital projects this year, or $4.65 billion at the midpoint. The fact that the company is sticking to its budget is worth noting since many rivals have had to boost their budgets more than once this year due to cost inflation and higher-than-planned activity levels by some of their drilling partners. ConocoPhillips, for example, increased its budget by $500 million in the second quarter to $6 billion due to those issues, and then boosted it again in the third quarter by $100 million.

While Anadarko did increase the midpoint of its capital budget by $250 million in the second quarter due to accelerated drilling activities, service cost inflation, and an increase in midstream investments, unlike ConocoPhillips, it held the line in the third quarter. That capital efficiency increases the company's confidence that it can continue growing oil production at a double-digit annual rate going forward on the cash flows it could generate on $50 oil.

Investors missed the forest for the trees

Shares of Anadarko Petroleum sold off more than 5% after it reported a slight miss in per-share earnings because investors focused on that headline number instead of the underlying strength of its business. Because of that, the oil stock is starting to look like a bargain again, especially now that shares have tumbled nearly 30% from the peak earlier this summer as oil prices have given back some of their gains. While oil will likely remain volatile, Anadarko can generate strong growth on $50 crude while producing significant free cash flow above that level, which will give the company even more fuel to keep buying back shares and creating long-term value for investors.