HOUSTON, Nov. 16, 2017 /PRNewswire/ -- Anadarko
Petroleum Corporation (NYSE: APC) today announced its 2018 capital
expectations and guidance. In 2018, the company expects to make
capital investments in the range of $4.2 to
$4.6 billion.(1) The capital program is designed
to enhance shareholder value by delivering attractive margins and
returns, while advancing the development of the company's core
assets within discretionary cash flow.
2018 ANADARKO CAPITAL PROGRAM HIGHLIGHTS
- Allocates approximately 80 percent of capital toward the
Delaware and DJ basins, including
Anadarko midstream, and the deepwater Gulf of Mexico
- Generates material free cash flow at current strip prices and
breaks even in a $50 oil and
$3 natural gas commodity-price
environment(2)
- Delivers a cash return on invested capital of 20
percent(3)
- Results in approximately 14-percent oil growth year-over-year,
which is 19-percent oil growth per debt-adjusted-share(4)
(5)
"Our 2018 investment plan will again be driven by capital
efficiency and financial discipline," said Anadarko Chairman,
President and CEO Al Walker. "These
key tenets have served us well for the last decade, as growth
within cash flow is fundamental to delivering capital-efficient
returns. Our repositioned asset footprint is built to succeed in a
market where oil prices exhibit volatility in a $45-$60 environment, with gas averaging
$3 per Mcf (thousand cubic feet). We
expect next year's capital expenditures to be inside of
discretionary cash flow at $50 and
$3, while generating free cash flow
of more than $700 million at the
current strip.(2) Further, we plan to return substantial
cash to shareholders by executing the remaining $1.5 billion of our $2.5
billion share-repurchase program during the coming
year."
"We are also modifying the metrics in our 2018 compensation
program to increase the profile for the role of capital efficiency
and financial discipline and refine the focus on our safety
performance," added Walker. "Performance objectives will now
include cash return on invested capital,(3) volume
growth per debt-adjusted share, and reserve additions per
debt-adjusted share.(5) As I have highlighted recently,
moving to debt-adjusted performance metrics in particular will
align our compensation programs to the capital-allocation
philosophy we have employed over the last ten years."
2018 Capital
Expectations ($4.2 - $4.6 Billion)(1)
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By
Area
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Billions
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By
Type
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U.S. Onshore
Upstream
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$
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2.10
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U.S.*
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85%
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Deepwater Gulf of
Mexico
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1.10
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International Cash
Generation**
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3%
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International
Operations
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0.15
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Future Upside
(Exploration and LNG)
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9%
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Exploration and
LNG
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0.35
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Corporate
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3%
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Midstream
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0.55
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Note: All amounts
are approximates.
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* All Anadarko
U.S. onshore upstream and midstream, and deepwater Gulf of
Mexico
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** Algeria and
Ghana operations
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Sales-Volume
Expectations(4)
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2017
Outlook
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2018
Expectations
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Total
(MMBOE)
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224 - 228
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245 - 255
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Oil
(MBOPD)
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343 - 348
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385 - 405
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U.S. FOCUS AREAS
In 2018, Anadarko plans to allocate approximately $900 million toward upstream activities in the
Delaware Basin of West Texas, with an additional $500 million directed toward Anadarko midstream
investments.(1) This program supports the continuation
of the company's efforts to build out one of the most expansive and
integrated infrastructure positions in the region. Anadarko has
successfully delineated the majority of its Wolfcamp-A oil-weighted
opportunity, which the company estimates to hold more than 3
billion barrels of oil equivalent (BOE) of net resources. The
company also advanced its efforts to capture operatorship on 70
percent of its acreage position primarily in Reeves and Loving counties. Additionally, Anadarko
continues to progress the construction of three Regional Oil
Treating Facilities to support its more cost-effective and
environmentally beneficial tankless battery design field-wide,
while also securing necessary gathering, processing, and takeaway
capacity. This comprehensive buildout plan and phased development
approach in the basin is expected to deliver incremental oil sales
volume during the second half of 2018, with total oil sales volume
expected to increase more than 50 percent relative to 2017. During
2018, the company plans to average seven operated rigs and six
completion crews.
In the DJ Basin of northeast Colorado, where the company has more than 2
billion BOE of net resources within its development area, Anadarko
expects to invest approximately $950
million on upstream activities in 2018. It plans to average
five operated rigs and three completions crews in the basin. The
company expects to increase year-over-year oil sales volume from
the DJ Basin by about 30 percent.
In 2018, Anadarko expects to allocate approximately $1.1 billion toward its deepwater Gulf of Mexico operations. The majority of
these investments are expected to be directed toward high-return
oil development opportunities near operated infrastructure at
Lucius, Horn Mountain, Marlin, Holstein and Marco Polo. The company plans to operate two
floating drillships and spud approximately five development wells
in the Gulf during the year.
INTERNATIONAL OPERATIONS
Anadarko plans to allocate more than $150
million toward its international cash-generating operations
in Algeria and Ghana in 2018. These investments will support
further drilling in the TEN development area, which is expected to
commence in early 2018, as well as additional drilling operations
in the Jubilee field following the Ghanaian Government's recent
approval of the full-field plan of development.
EXPLORATION AND LNG
The company's exploration investments in 2018 are expected to
total about $200 million. Exploration
spending will primarily be focused on the Gulf of Mexico, where the company plans to
drill identified prospects near existing operated infrastructure.
Additional exploration investment will be allocated to the U.S.
onshore, as the company continues to identify future areas that can
make a material and scalable addition to its portfolio.
Approximately $150 million is
expected to be invested during 2018 as the company advances the
Mozambique LNG project. This investment will primarily be used to
fund Anadarko's portion of the costs associated with preparing the
site of the future LNG park.
PRESENTATION AND WEBCAST
Anadarko's Executive Vice President, Finance and Chief Financial
Officer, Bob Gwin, will provide
additional details and information regarding the 2018 capital
program during his presentation at the Bank of America Merrill
Lynch 2017 Global Energy Conference today at 10:30 a.m. EST. The link to the audio webcast
presentation will be available in the Investor section at
www.anadarko.com. The replay and slide presentation also will be
available on the company's website for approximately 30 days
following the event.
(1) Does not include capital investments made by
Western Gas Partners, LP (NYSE: WES).
(2) See the accompanying Adjusted Free Cash Flow
table for a reconciliation of the GAAP to the non-GAAP financial
measure and a statement indicating why management believes the
non-GAAP financial measure provides useful information for
investors.
(3) Cash Return on Invested Capital (CROIC) is
computed as follows:
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(APC Consolidated
Cash Flows from Operations (CFFO) - WGP CFFO + WGP distributions to
APC)
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(Stockholders' Equity
+ Anadarko Debt)
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(4) Amounts are divestiture adjusted.
(5) Debt-Adjusted Share(s) is computed as
follows:
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Anadarko
Debt
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+ Shares
Outstanding
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Share
Price
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http://photos.prnewswire.com/prnh/20141103/156201LOGO
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
2016, the company had approximately 1.72 billion barrels-equivalent
of proved reserves, making it one of the world's largest
independent exploration and production companies. For more
information about Anadarko and APC Flash Feed updates, please visit
www.anadarko.com.
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 realize its expectations
regarding performance; to successfully execute upon its capital
program; to efficiently identify and deploy capital resources; to
meet financial and operating guidance and achieve the production
levels identified in this news release; to meet the long-term goals
identified in this news release; to successfully complete the
share-repurchase program; to finalize the necessary steps to ensure
operatorship; to successfully drill, complete, test and produce the
wells identified in this news release; to timely complete and
commercially operate the projects, infrastructure, and drilling
prospects identified in this news release; and to successfully
plan, secure additional government approvals, enter into long-term
sales contracts, finance, build, and operate the necessary
infrastructure and LNG park in Mozambique. See "Risk Factors" in the
company's 2016 Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and other public filings and press releases. Anadarko
undertakes no obligation to publicly update or revise any
forward-looking statements.
Cautionary Note to Investors: The United States Securities
and Exchange Commission ("SEC") permits oil and gas companies, in
their filings with the SEC, to disclose only proved, probable and
possible reserves that meet the SEC's definitions for such terms.
Anadarko uses certain terms in this news release, such as "net
resources" and similar terms that the SEC's guidelines strictly
prohibit Anadarko from including in filings with the SEC. U.S.
investors are urged to consider closely the disclosure in
Anadarko's Form 10-K for the year ended Dec.
31, 2016, File No. 001-08968, available from Anadarko at
www.anadarko.com or by writing Anadarko at: Anadarko Petroleum
Corporation, 1201 Lake Robbins Drive, The
Woodlands, Texas 77380, Attn: Investor Relations. This form
may also be obtained by contacting the SEC at
1-800-SEC-0330.
Anadarko Contacts
INVESTORS:
Robin
Fielder, robin.fielder@anadarko.com, 832.636.1462
Andy Taylor,
andy.taylor@anadarko.com, 832.636.3089
Pete Zagrzecki,
pete.zagrzecki@anadarko.com, 832.636.7727
MEDIA:
John
Christiansen, john.christiansen@anadarko.com,
832.636.8736
Stephanie Moreland,
stephanie.moreland@anadarko.com, 832.636.2912
Anadarko Petroleum
Corporation
Reconciliation of GAAP to Non-GAAP Financial
Measures
Below are reconciliations of certain GAAP to non-GAAP financial
measures, each as required under Regulation G of the Securities
Exchange Act of 1934. This non-GAAP information should be
considered by the reader in addition to, but not instead of, the
financial statements prepared in accordance with GAAP. The non-GAAP
financial information presented may be determined or calculated
differently by other companies and may not be comparable to
similarly titled measures.
Adjusted Discretionary Cash Flow from Operations (Adjusted
DCF) and Adjusted Free Cash Flow (Adjusted FCF)
The Company defines Adjusted DCF as net cash provided by (used
in) operating activities before changes in accounts receivable;
changes in accounts payable and other current liabilities; other
items, net; certain nonoperating and other excluded items; and
Western Gas Partners, LP (WES)/Western Gas Equity Partners, LP
(WGP) distributions to third parties.
The Company defines Adjusted FCF as Adjusted DCF adjusted by
capital expenditures excluding WES and cash received from
monetizations.
Management believes that these measures are useful to management
and investors as a measure of a company's ability to internally
fund its capital expenditures and to service or incur additional
debt. These measures eliminate the impact of certain items that
management does not consider to be indicative of the Company's
performance from period to period. To assist in measuring the
Company's performance, management will also evaluate Anadarko on a
deconsolidated basis, which excludes WES.
The Company's press release includes a forward-looking Adjusted
FCF estimate; however, the Company is unable to provide a
quantitative reconciliation of the forward-looking non-GAAP measure
to its most directly comparable forward-looking GAAP measure
because management cannot reliably predict certain of the necessary
components of such forward-looking GAAP measure. The reconciling
items in future periods could be significant. Below is a
reconciliation of Net cash provided by (used in) operating
activities (GAAP) to Adjusted free cash flow (Non-GAAP) for the
most recently reported annual period.
millions
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Year Ended
December, 31 2016
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Net cash provided
by (used in) operating activities (GAAP)
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$
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3,000
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Adjusted
by:
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Increase (decrease)
in accounts receivable
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(677)
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(Increase) decrease
in accounts payable and other current liabilities
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443
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Other items,
net
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142
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Certain nonoperating
and other excluded items
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299
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WES/WGP distributions
to third parties
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(362)
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Adjusted
discretionary cash flow from operations (Non-GAAP) *
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$
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2,845
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Adjusted
by:
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Capital expenditures
excluding WES*
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(2,823)
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Monetizations
excluding WES
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3,537
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Adjusted free cash
flow (Non-GAAP)
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$
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3,559
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*WES capital
expenditures
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491
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SOURCE Anadarko Petroleum Corporation