Anadarko Petroleum Corporation (NYSE:APC) posted a fourth-quarter GAAP loss of $0.78 a share and a full-year loss of $3.47 a share. But despite the red ink and missing analyst estimates, the company's underlying business did pretty well. And the future looks solid, too, which is part of the reason the stock advanced on the news.

Muddy waters
Anadarko's fourth-quarter top line of $3.177 billion fell short of analyst expectations of roughly $3.8 billion by a little over 15%. For the full year, however, revenues of $18.5 billion beat analyst expectations of $17.5 billion. The quarterly revenue results versus the full-year results show distinctly what's been going on -- falling commodity prices.

For example, for the full year, oil-related revenues advanced about 6% compared with 2013, helped along by increased production and strong pricing in the first half. But quarter over quarter in the year's final stanza, oil revenues declined nearly 22%. As CEO Al Walker noted, the company is working in a "challenging current environment." It only became a challenge, of course, in June, when oil started its deep plunge.

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That said, excluding the impact of divestitures, Anadarko was able to replace 160% of what it pulled from the ground last year, an impressive replacement ratio. And, at the same time, it increased its sales volume by 11%. So, operationally, speaking, the company is doing well. Energy prices just aren't cooperating.

But things get more confusing when you look at the bottom line. For example, the company posted a full-year loss of $3.47 a share, but that includes roughly $4.4 billion worth of costs associated with the settlement of the Tronox pollution case, a legacy issue that came with the acquisition of that entity several years ago. It's good news that this unfortunate issue has been largely resolved, but it certainly makes the company's results look bad at first glance.

The big picture
However, looking to the future, the best news in the quarter was probably related to production. For example, "The company commissioned the 80,000-BOPD Lucius facility in the deepwater Gulf of Mexico and achieved first oil on Jan. 16." And in Ghana, "new gas-handling infrastructure was completed" that should "enable increased oil production beginning in 2015." So this year should see another uptick in production. That will help to offset weak oil prices to some degree.

Source: Wikimedia Commons.

Next year, meanwhile, looks good as well, with another Gulf of Mexico well on track for first oil in 2016. And a another project in Ghana is "on schedule" to start producing in 2016. So Anadarko appears to have production growth ahead despite the overhang of low oil prices. That sets it up to benefit when oil prices eventually recover.

Shares advance on an ugly quarter
The resolution of a legal overhang and, more importantly, the positive developments on the production front are both responsible for Anadarko's share advance despite a relatively ugly quarter and year in terms of earnings. That said, it appears the market has started to see that this oil industry player's production profile is in good shape and getting better.

If you're looking for an oil company that's positioned to take advantage of rising oil prices, Anadarko could be a good option for you. Near-term results are likely to be weak, as with all industry players, but Anadarko looks to have production potential that the market is only now starting to appreciate.