Commodity futures have a funny way of playing with companies' bottom lines. As a testament, take a peek at Anadarko Petroleum (NYSE: APC), which has recorded a 70% fall in net income in the first quarter this year compared with the corresponding quarter last year -- thanks to these hedging instruments.

Number crunching
Anadarko's first-quarter revenues actually grew to $3.3 billion, 3.6% growth compared with the first quarter of 2010. Bear in mind, this company holds a 25% stake in the Macondo well, which blew out last April in the Gulf of Mexico, in which BP (NYSE: BP) holds a majority stake of 65%. However, Anadarko is gradually shaking off the setback, with quarterly revenues jumping by 23.5% on a sequential basis.

Operations grew marginally with first-quarter sales volumes of 690,000 barrels of oil equivalent per day (Boe/d) versus 686,000 Boe/d a year earlier. Rising expenses were to blame for operating income staying rather flat.

The big story here is that hedging instruments played spoilsport. Total losses due to derivative contracts for this quarter were $197 million whereas the company had gained $559 million in the same quarter last year from these instruments.

While futures contracts play an undeniable role in limiting a company's losses, management might want to take a deeper look as to what can be done to limit such damages in future. Noble Energy (NYSE: NBL) faced a similar situation this quarter.

But there's hope
The unrealized part of after-tax losses on derivatives was $160 million with total notional loss standing at $147 million. This interests me as it puts the adjusted net income at $363 million, or $0.72 per share, beating Wall Street estimates of $0.58 comfortably.

Derivatives are wreaking havoc with the company's stated earnings, but operationally the company is moving forward regardless. With the discovery of substantial quality deep water reserves last month off Ghana, Anadarko has positioned itself favorably for further growth. It even plans to mobilize its Discoverer Spirit drillship from the Gulf of Mexico to the West African nation as a result. This makes sense as drilling in the Gulf has yet to be permitted for many players including Anadarko.

A Foolish bottom line
The immediate future does not look rosy as BP has asked the company to bear $4.7 billion in spill-related costs. With the issue still facing legal tangles, Anadarko may find itself pushed to the wall if any ruling goes against it. Still, with its sheer magnitude of reserves -- totaling 2.42 billion barrels-equivalent of proved reserves -- and expanding operations, Foolish investors of this stock need not be unduly bothered.