Anadarko Petroleum Corporation (NYSE:APC) today announced first-quarter
2008 net income available to common stockholders totaled $286 million,
or $0.61 per share (diluted). Income from continuing operations totaled
$237 million, or $0.50 per share (diluted). The net income results
include certain items typically excluded by the investment community in
published estimates. In total, these items reduced net income by
approximately $440 million, or $0.94 per share (diluted) on an after-tax
basis.(1) Cash flow from continuing operations
in the first quarter of 2008 was $2.01 billion, and discretionary cash
flow totaled $1.87 billion.(2)
FIRST-QUARTER 2008 OPERATIONAL HIGHLIGHTS
8% increase in production over first-quarter 2007 from retained
properties
Record production in the Greater Natural Buttes and the Powder River
Basin
Deepwater discovery offshore Ghana at the Odum-1 exploration well
Announced sale of the Peregrino and Kaskida fields for $2.1 billion
including $300 million of contingent consideration
“As evidenced throughout 2007 and by the
first-quarter 2008 operational highlights (above), our balanced
portfolio of properties continues to deliver significant organic growth
and positive financial results,” Anadarko
Chairman, President and CEO Jim Hackett said. “I
am pleased with our operating performance through the first three months
of 2008, which again exceeded the high end of our production
expectations. As a result of this performance, record production in
several U.S. onshore fields and our confidence in our portfolio of
assets, we are reaffirming our full-year production guidance of 207
million to 212 million BOE (barrels of oil equivalent). This
reaffirmation takes into account the anticipated four to six weeks of
shut-in production at Independence Hub, where we are working with our
partners to repair the third-party-owned export pipeline.
“In addition, I would like to provide an
update on several significant developments in our deepwater drilling
program. The Mahogany-2 appraisal well, located in 3,540 feet of water
on the West Cape Three Points Block offshore Ghana, encountered
high-quality stacked reservoir sandstones with approximately 165 feet of
net oil-bearing pay. Moreover, the Mahogany-2 well is located
approximately seven miles to the northeast and up-dip from the
successful Hyedua-1 well on the Deepwater Tano license, indicating a
gross oil column of nearly 1,955 feet. We now plan to perform a
drillstem test on the Mahogany-2 well to gain a better understanding of
the fluid and flow characteristics, which we anticipate will lead us to
update our estimated resource range for the area. Also in our deepwater
international program, we have made arrangements to move the ‘Deepwater
Millennium’ drillship to Brazil to enable us
to execute upon our deepwater subsalt program in the Espírito
Santo and Campos basins.
“At our K2 unit in the deepwater Gulf of Mexico’s
Green Canyon area, we have completed drilling the GC 561 #2 development
well. This down-dip appraisal well helped define the extent of the
oil-bearing reservoirs that are present in the unit’s
six producing wells and also encountered new off-structure, oil-bearing
sands. The well is currently being side-tracked to further evaluate the
extent of these sands,” Hackett added.
First-quarter 2008 sales volumes of natural gas, crude oil and natural
gas liquids totaled 53 million BOE, or 585,000 BOE per day.
First-quarter 2008 natural gas sales volumes averaged 2.14 billion cubic
feet per day at an average price of $6.17 per thousand cubic feet,
including a loss on derivatives of $1.41 per thousand cubic feet. Oil
sales volumes in the first quarter averaged 190,000 barrels per day, at
an average price of $78.21 per barrel, including a loss on derivatives
of $14.80 per barrel. Natural gas liquids sales volumes averaged 39,000
barrels per day, at an average price of $56.42 per barrel.
In the 2007 first quarter, net income available to common stockholders
was $1.72 billion, or $3.70 per share (diluted). Income from continuing
operations in the first quarter of 2007 totaled $1.7 billion, or $3.64
per share (diluted). The results for the first quarter of 2007 included
gains on divestitures of approximately $1.66 billion after income taxes,
or $3.56 per share (diluted).
CONFERENCE CALL TOMORROW AT 9 A.M. CDT, 10 A.M. EDT
Anadarko will host a conference call on Tuesday, May 6, at 9 a.m.
Central Daylight Time (10 a.m. Eastern Daylight Time) to discuss
first-quarter results and the company’s
outlook for the remainder of 2008. The dial-in number is 888.713.4205 in
the United States or 617.213.4862 internationally. The confirmation
number is 89231908. For complete instructions on how to participate in
the conference call, or to listen to the live audio webcast and slide
presentation, please visit www.anadarko.com.
A replay of the call will also be available on the Web site for
approximately 30 days following the conference call.
ANADARKO OPERATIONS REPORT
For more details on Anadarko’s operations,
please refer to the comprehensive report on first-quarter activity. The
report will be available at www.anadarko.com
on the Investor Relations page.
FINANCIAL DATA
Nine pages of summary financial data follow, including current hedge
positions, financial guidance and supplemental production guidance. All
prior-year information has been re-cast to reflect the successful
efforts method of accounting.
Anadarko Petroleum Corporation’s mission is
to deliver a competitive and sustainable rate of return to shareholders
by exploring for, acquiring and developing oil and natural gas resources
vital to the world’s health and welfare. As
of year-end 2007, Anadarko had 2.4 billion barrels of oil equivalent of
proved reserves, making it one of the world’s
largest independent oil and natural gas exploration and production
companies. For more information about Anadarko, please visit www.anadarko.com.
(1) See the accompanying table for details of
certain items included in net income.
(2) See the accompanying table for a
reconciliation of GAAP to non-GAAP financial measures and a statement
indicating why management believes the non-GAAP measures are useful
information for investors.
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Anadarko believes that its
expectations are based on reasonable assumptions. No assurance, however,
can be given that such expectations will prove to have been correct. A
number of factors could cause actual results to differ materially from
the projections, anticipated results or other expectations expressed in
this news release, including Anadarko’s
ability to successfully meet its revised production guidance, the timely
repair of the export pipeline at Independence Hub and the successful
completion and commercial operation of the drilling prospects identified
in this news release. See “Risk Factors”
in the company’s 2007 Annual Report on Form
10-K and other public filings and press releases. Anadarko undertakes no
obligation to publicly update or revise any forward-looking statements.
Anadarko Petroleum Corporation
Certain Items Included in Net Income
Quarter Ended March 31, 2008
Before
After
Per Share
millions except for per-share amounts
Tax
Tax
(diluted)
Unrealized loss on commodity and marketing derivatives
$
481
$
305
$
0.65
Charges associated with 2007 successful efforts conversion*
82
52
$
0.11
Deferred tax expense on pending Brazil divestiture
83
$
0.18
$
563
$
440
$
0.94
* In the first quarter of 2008, it was
determined that adjustments related to the company's 2007
conversion from the full cost to successful efforts method of
accounting were necessary. Management concluded that the
misstatements were not material and corrected the error in the
current period. These adjustments resulted in a decrease to Gains
(losses) on divestitures and other, net of $82 million.
Reconciliation of GAAP to Non-GAAP Measures
Below is a reconciliation of cash provided by operating activities
(GAAP) to discretionary cash flow (non-GAAP) as required under
Regulation G of the Securities Exchange Act of 1934. The company
uses discretionary cash flow to demonstrate the company's ability to
internally fund capital expenditures and to service or incur
additional debt. It is useful in comparisons of oil and gas
exploration and production companies because it excludes
fluctuations in assets and liabilities.
Quarter Ended
March 31
millions
2008
2007
Cash Flow
Net cash provided by operating activities - continuing operations
$
2,008
$
800
Add back:
Change in accounts receivable
(412
)
(1,047
)
Change in accounts payable and accrued expenses
87
460
Change in other items - net
187
(131
)
Discretionary Cash Flow from Continuing Operations
$
1,870
$
82
Anadarko Petroleum Corporation
Quarter Ended
Summary Financial Information
March 31
millions except per share amounts
2008
2007
Revenues and Other
Gas sales
$
1,199
$
1,075
Oil and condensate sales
1,350
1,071
Natural gas liquids sales
201
157
Gathering, processing and marketing sales
268
361
Gains (losses) on divestitures and other, net
(40
)
2,586
Total
2,978
5,250
Costs and Expenses
Oil and gas operating
245
340
Oil and gas transportation and other
130
112
Exploration
243
139
Gathering, processing and marketing
192
294
General and administrative
204
264
Depreciation, depletion and amortization
810
723
Other taxes
359
335
Impairments
-
12
Total
2,183
2,219
Operating Income
795
3,031
Interest Expense and Other (Income) Expense
Interest expense
227
316
Other (income) expense
(13
)
(29
)
Total
214
287
Income from Continuing Operations Before Income Taxes
581
2,744
Income Tax Expense
344
1,049
Income from Continuing Operations
$
237
$
1,695
Income from Discontinued Operations, net of taxes
50
27
Net Income
$
287
$
1,722
Preferred Stock Dividends
1
1
Net Income Available to Common Stockholders
$
286
$
1,721
Per Common Share
Income from continuing operations - basic
$
0.50
$
3.66
Income from continuing operations - diluted
$
0.50
$
3.64
Income from discontinued operations, net of taxes - basic
$
0.11
$
0.06
Income from discontinued operations, net of taxes - diluted
$
0.11
$
0.06
Net income available to common stockholders - basic
$
0.61
$
3.71
Net income available to common stockholders - diluted
$
0.61
$
3.70
Average Number of Common Shares Outstanding - Basic
468
463
Average Number of Common Shares Outstanding - Diluted
470
465
Exploration Expense
Dry hole expense
$
60
$
33
Impairments of unproved properties
100
74
Geological and geophysical expense
51
13
Exploration overhead and other
32
19
Total
$
243
$
139
Anadarko Petroleum Corporation
Quarter Ended
Summary Financial Information
March 31
millions
2008
2007
Cash Flow from Operating Activities
Net income
$
287
$
1,722
Less income from discontinued operations, net of taxes
50
27
Depreciation, depletion and amortization
810
723
Deferred income taxes
37
(401
)
Dry hole expense and impairments of unproved properties
160
107
Impairments
-
12
(Gains) losses on divestitures, net
171
(2,598
)
Unrealized (gains) losses on derivatives
488
494
Other noncash items
(33
)
50
Discretionary Cash Flow from Continuing Operations
1,870
82
(Increase) decrease in accounts receivable
412
1,047
Increase (decrease) in accounts payable and accrued expenses
(87
)
(460
)
Other items - net
(187
)
131
Cash provided by (used in) operating activities - continuing
operations
2,008
800
Cash provided by (used in) operating activities - discontinued
operations
-
11
Net cash provided by (used in) operating activities*
$
2,008
$
811
Capital Expenditures
Capital spending
$
1,037
$
960
Capitalized interest
19
39
Total
$
1,056
$
999
March 31,
December 31,
2008
2007
Condensed Balance Sheet
Cash and cash equivalents
$
1,308
$
1,268
Other current assets
2,990
3,218
Current assets held for sale
10
-
Net properties and equipment
36,619
37,451
Other assets
1,133
1,030
Goodwill and other intangible assets
5,140
5,166
Long-term assets held for sale
1,135
318
Total Assets
$
48,335
$
48,451
Current debt
$
396
$
1,396
Other current liabilities
4,221
3,838
Current liabilities associated with assets held for sale
37
-
Long-term debt
11,158
11,151
Midstream subsidiary note to a related party
2,200
2,200
Other long-term liabilities
13,387
13,496
Other long-term liabilities associated with assets held for sale
279
6
Stockholders' equity
16,657
16,364
Total Liabilities and Stockholders' Equity
$
48,335
$
48,451
Capitalization
Total debt
$
13,754
$
14,747
Stockholders' equity
16,657
16,364
Total
$
30,411
$
31,111
Capitalization Ratios
Total debt
45
%
47
%
Stockholders' equity
55
%
53
%
Anadarko Petroleum Corporation
Quarter Ended
Sales Volumes and Prices
March 31
2008
2007
Natural Gas
United States
Volumes, billion cubic feet
194
198
Average daily volumes, million cubic feet per day
2,137
2,204
Price per thousand cubic feet excluding derivatives
$
7.58
$
6.24
Realized gain (loss) on derivatives
$
(0.11
)
$
0.85
Unrealized gain (loss) on derivatives
$
(1.30
)
$
(1.67
)
Total gains (losses) on derivatives
$
(1.41
)
$
(0.82
)
Total price per thousand cubic feet
$
6.17
$
5.42
Crude Oil and Condensate
United States
Volumes, million barrels
10
14
Average daily volumes, thousand barrels per day
122
149
Price per barrel excluding derivatives
$
92.59
$
52.81
Realized gain (loss) on derivatives
$
(3.16
)
$
6.13
Unrealized gain (loss) on derivatives
$
(12.39
)
$
(11.28
)
Total gains (losses) on derivatives
$
(15.55
)
$
(5.15
)
Price per barrel
$
77.04
$
47.66
Algeria
Volumes, million barrels
5
6
Average daily volumes, thousand barrels per day
51
71
Price per barrel excluding derivatives
$
98.02
$
59.58
Realized gain (loss) on derivatives
$
(3.80
)
$
-
Unrealized gain (loss) on derivatives
$
(14.23
)
$
(1.93
)
Total gains (losses) on derivatives
$
(18.03
)
$
(1.93
)
Price per barrel
$
79.99
$
57.65
Other International
Volumes, million barrels
2
2
Average daily volumes, thousand barrels per day
17
16
Price per barrel
$
81.08
$
43.60
Total
Volumes, million barrels
17
22
Average daily volumes, thousand barrels per day
190
236
Price per barrel excluding derivatives
$
93.01
$
54.18
Realized gain (loss) on derivatives
$
(3.04
)
$
3.86
Unrealized gain (loss) on derivatives
$
(11.76
)
$
(7.69
)
Total gains (losses) on derivatives
$
(14.80
)
$
(3.83
)
Total price per barrel
$
78.21
$
50.35
Natural Gas Liquids
United States
Volumes, million barrels
4
4
Average daily volumes, thousand barrels per day
39
49
Total price per barrel
$
56.42
$
35.65
Total Barrels of Oil Equivalent (BOE)
Volumes, million BOE
53
59
Average daily volumes, thousand BOE per day
585
652
Anadarko Petroleum Corporation
Financial and Operating Guidance
Continuing Operations
As of May 5, 2008
2nd Quarter
Full Year
2008 Forecast
2008 Forecast
Units
Units
Total Sales (MMBOE)
50
-
52
207
-
212
Crude Oil (MBbl/d):
185
-
195
175
-
185
United States
110
-
115
105
-
110
Algeria
55
-
65
55
-
60
Other International
16
-
18
14
-
15
Natural Gas (MMcf/d):
United States
1,950
-
2,000
2,130
-
2,155
Natural Gas Liquids (MBbl/d):
United States
35
-
38
37
-
39
$ / Unit
$ / Unit
Price Differentials vs NYMEX (w/o hedges)
Crude Oil ($/Bbl):
(4.00
)
-
(6.00
)
(4.00
)
-
(6.00
)
United States
(4.00
)
-
(6.00
)
(5.00
)
-
(7.00
)
Algeria
0.00
-
(2.00
)
(1.00
)
-
(3.00
)
Other International
(15.00
)
-
(17.00
)
(13.00
)
-
(15.00
)
Natural Gas ($/Mcf):
United States
(1.00
)
-
(1.50
)
(0.75
)
-
(1.20
)
Anadarko Petroleum Corporation
Financial and Operating Guidance
Continuing Operations
As of May 5, 2008
2nd Quarter
Full Year
2008 Forecast
2008 Forecast
$ MM
$ MM
Other Revenues:
Gathering, Processing & Marketing Margins
90
-
100
360
-
400
Minerals and Other
25
-
35
100
-
120
Costs and Expenses:
$ / Boe
$ / Boe
Oil & Gas Lease Operating
5.25
-
5.75
5.00
-
5.50
Oil & Gas Transportation
2.25
-
2.50
2.25
-
2.50
Depreciation, Depletion and Amortization
14.75
-
15.00
14.75
-
15.00
Production Taxes (% of Revenue)
11.5
%
-
12.5
%
11.5
%
-
12.5
%
$ MM
$ MM
General and Administrative
185
-
200
750
-
800
Exploration Expense
Non-Cash
150
-
170
850
-
900
Cash
90
-
110
300
-
350
Interest Expense
200
-
210
800
-
825
Other (Income) Expense
(10
)
-
10
(20
)
-
20
Effective Tax Rate
45
%
-
50
%
45
%
-
50
%
Avg. Shares Outstanding (MM)
Basic
469
-
470
469
-
471
Diluted
470
-
472
473
-
475
$ MM
$ MM
Capital Investment
1,150
-
1,250
4,600
-
4,750
Capital Projects
1,140
-
1,230
4,550
-
4,675
Capitalized Interest
10
-
20
50
-
75
Anadarko Petroleum Corporation
Commodity Hedge Positions (Excluding Natural Gas Basis)
As of May 5, 2008
Weighted Average Price per MMBtu
Volume
(thousand
MMBtu/d)
Floor Sold
Floor Purchased
Ceiling Sold
Natural Gas
Three-Way Collars
Remainder of 2008
500
$
5.00
$
7.50
$
14.26
900
$
5.50
$
7.50
$
9.14
1,400
$
5.32
$
7.50
$
10.97
2009
530
$
5.45
$
7.50
$
11.25
2010
—
$
—
$
—
$
—
2011
—
$
—
$
—
$
—
Weighted Average Price per barrel
Volume
(thousand
MBbls/d)
Floor Sold
Floor Purchased
Ceiling Sold
Crude Oil
Three-Way Collars
Remainder of 2008
31
$
34.09
$
49.09
$
87.09
20
$
45.00
60.00
$
87.38
35
$
45.00
$
60.00
$
101.39
86
$
41.07
$
56.07
$
92.98
2009
48
$
37.51
$
52.51
$
87.04
2010
18
$
34.18
$
49.19
$
86.76
2011
3
$
35.00
$
50.00
$
86.00
2012
2
$
35.00
$
50.00
$
92.50
Anadarko Petroleum Corporation
Natural Gas Basis Hedge Positions
As of May 5, 2008
Volume
(thousand
MMBtu/d)
Price per
MMBtu
Basis Swaps
Remainder of 2008
Gulf Coast
560
$
(0.24
)
Mid Continent
365
$
(1.01
)
Rocky Mountains
455
$
(1.47
)
West Texas
35
$
(0.92
)
1,415
$
(0.85
)
2009
Gulf Coast
315
$
(0.15
)
Mid Continent
330
$
(0.85
)
Rocky Mountains
555
$
(1.25
)
1,200
$
(0.85
)
2010
Mid Continent
35
$
(0.61
)
Rocky Mountains
310
$
(1.13
)
345
$
(1.08
)
Rockies Export Firm Transportation
As of May 5, 2008
Daily Volume (MMBtu's)
by Pricing Point
Delivery/Pricing Point
Remainder of 2008
Mid Continent
491
West Coast
88
San Juan
15
594
2009
Mid Continent
491
West Coast
88
San Juan
15
594
2010
Mid Continent
491
West Coast
88
San Juan
15
594
Anadarko Petroleum Corporation
Retained Properties Sales
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
FY 2007
Actuals
Actuals
Actuals
Actuals
Actuals
Actuals
TOTAL SALES (MMBOE)
48.5
49.2
46.8
46.5
53.1
195.7
Natural Gas (MMcf/d)
1,791.5
1,794.3
1,639.1
1,646.9
2,013.0
1,774.2
Crude Oil (MBbl/d)
203.4
207.9
202.0
192.0
203.8
201.5
Natural Gas Liquids (MBbl/d)
34.2
39.2
39.0
39.4
37.9
38.9
ROCKIES
Natural Gas (MMcf/d)
917.2
934.4
840.4
849.3
909.4
883.2
Crude Oil (MBbl/d)
23.1
23.4
23.8
24.0
26.7
24.5
Natural Gas Liquids (MBbl/d)
16.9
16.2
15.2
15.8
14.7
15.5
Total Sales (MMBOE)
17.4
17.6
16.3
16.7
17.7
68.3
SOUTHERN
Natural Gas (MMcf/d)
639.5
645.3
617.3
565.6
589.4
604.5
Crude Oil (MBbl/d)
12.2
10.9
10.2
8.6
10.2
10.0
Natural Gas Liquids (MBbl/d)
10.3
14.3
14.4
13.8
13.9
14.2
Total Sales (MMBOE)
11.6
11.9
11.6
10.7
11.3
45.6
GULF OF MEXICO
Natural Gas (MMcf/d)
239.7
223.2
200.5
240.0
522.1
297.3
Crude Oil (MBbl/d)
63.0
61.3
67.2
62.8
62.1
63.4
Natural Gas Liquids (MBbl/d)
4.2
4.0
4.6
5.0
6.2
5.0
Total Sales (MMBOE)
9.6
9.2
9.6
9.9
14.3
43.0
INTERNATIONAL / FRONTIER
Natural Gas (MMcf/d)
0.4
0.3
0.3
0.3
0.3
0.3
Crude Oil (MBbl/d)
105.1
112.4
100.8
96.6
104.9
103.6
Natural Gas Liquids (MBbl/d)
-
-
-
-
-
-
Total Sales (MMBOE)
9.7
10.1
9.2
8.9
9.7
37.8
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