Anadarko Announces First-Quarter Results
HOUSTON, TX -- (Marketwire) -- 05/02/11 -- Anadarko Petroleum Corporation (NYSE: APC)
today announced first-quarter 2011 net income attributable to common
stockholders of $216 million, or $0.43 per share (diluted). These results
include certain items typically excluded by the investment community in
published estimates. In total, these items decreased net income by
approximately $147 million, or $0.29 per share (diluted) on an after-tax
basis.(1) Cash flow from operating activities in the first quarter of 2011
was $1.289 billion, and discretionary cash flow totaled $1.674 billion.(2)
First-Quarter 2011 Highlights
-- Achieved record sales volumes, comprised of 42 percent liquids
-- Announced a $1.6 billion joint venture in the Eagleford Shale
-- Announced six successful offshore discoveries and/or appraisal wells
-- Reduced lease operating expense per unit by 13 percent over the
fourth-quarter 2010
-- Announced the $576 million acquisition of the Wattenberg Processing
Plant
'Anadarko delivered record sales volumes in the first quarter, including a
15-percent quarter-over-quarter increase in daily liquids volumes, strong
cash flow and improved margins,' said Anadarko Chairman and CEO Jim
Hackett. 'This record performance was highlighted by the rapid growth of
our shale plays and our first lifting from the Jubilee field offshore
Ghana. Our deepwater exploration program also achieved excellent results in
the quarter with three discoveries and three successful offshore appraisal
wells. Early in the second quarter, we closed the previously announced $1.6
billion joint venture with KNOC (Korea National Oil Corporation) in the
Eagleford Shale, validating the tremendous embedded value of this
resource.'
During the first quarter of 2011, sales volumes totaled 62 million barrels
of oil equivalent (BOE), or 690,000 BOE per day, averaging approximately
2.4 billion cubic feet of natural gas per day, 212,000 barrels of oil per
day (BOPD), and 76,000 barrels of natural gas liquids per day.
Operations Summary
Anadarko's record sales volumes benefited from the company's first oil
lifting at the Jubilee field in Ghana, as well as continued production
growth in the Eagleford and Marcellus shale plays. In Ghana, current gross
production from the Jubilee field is more than 70,000 BOPD and continues to
ramp up toward capacity of 120,000 BOPD, which is expected by the third
quarter of 2011. In the company's shale plays, average sales volumes in the
Eagleford and Marcellus areas increased by about 30 percent and 82 percent,
respectively, over the fourth quarter of 2010.
The company recently closed the $1.6 billion Eagleford joint-venture
agreement with a subsidiary of KNOC. Under the terms of the agreement, KNOC
will fund approximately 100 percent of capital costs in the play for the
remainder of this year and up to 90 percent of costs thereafter, until the
carry is exhausted. The amount to be paid includes an approximate $48
million post-effective date reimbursement, and KNOC also exercised its
option to acquire an approximate 25-percent interest in associated
midstream assets for reimbursement of an additional $38 million.
In the Rockies, Anadarko announced the acquisition of the Wattenberg
Processing Plant in northeastern Colorado. This acquisition is expected to
improve field recoveries and allow for future expansion in the greater
Denver-Julesburg Basin, where Anadarko continues an active program with
seven rigs drilling directional wells in the Wattenberg field and three
rigs drilling horizontal wells in the emerging Niobrara play.
Exploration Summary
Anadarko announced three deepwater discoveries during the first quarter of
2011. The Teak-1 and Teak-2 discoveries, located in the
30.875-percent-owned West Cape Three Points Block offshore Ghana,
encountered high-quality oil, condensate and natural gas pay in
Turonian-age reservoirs similar to those found in the adjacent Jubilee
field, as well as Campanian-age reservoirs. In Mozambique, the company
announced the Tubarão discovery, marking its fourth operated natural gas
discovery in the 36.5 percent-owned Offshore Area 1 of the Rovuma Basin.
In the Deepwater Tano Block offshore Ghana, where Anadarko holds an
18-percent working interest, the company and its partners announced
successful appraisal wells at Enyenra-2A, Tweneboa-3 and Tweneboa-3ST.
Subsequent to quarter end, the operator also announced the successful
Tweneboa-4 appraisal well. Additional appraisal activity is ongoing in the
Tweneboa/Enyenra complex as the partnership continues to work toward a
declaration of commerciality, which is expected later this year.
Financial Summary
Anadarko ended the first quarter of 2011 with approximately $3.5 billion of
cash on hand, maintained access to its five-year, $5 billion undrawn credit
facility and generated $87 million of free cash flow. The company's
estimated 2011 capital expenditures were increased by approximately $600
million as a result of the Wattenberg Processing Plant acquisition,
resulting in an estimated capital spending range of $6.2 to $6.6 billion,
excluding capital expenditures related to Western Gas Partners, LP.
Operations Report
For more details on Anadarko's operations, please refer to the
comprehensive report on first-quarter 2011 activity. The report is
available at www.anadarko.com on the Investor Relations page.
Conference Call Tomorrow at 9 a.m. CDT, 10 a.m. EDT
Anadarko will host a conference call on Tuesday, May 3, at 9 a.m. Central
Daylight Time (10 a.m. Eastern Daylight Time) to discuss first-quarter
results, current operations and the company's outlook for the remainder of
2011. The dial-in number is 888.713.4217 in the United States or
617.213.4869 internationally. The confirmation number is 98218183. 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.
Financial Data
Eight pages of summary financial data follow, including current hedge
positions, financial guidance and supplemental production guidance.
(1) See the accompanying table for details of certain items affecting
comparability.
(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 financial measures provide useful information for investors.
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 2010, the company had approximately 2.42 billion
barrels-equivalent of proved reserves, making it one of the world's largest
independent exploration and production companies. For more information
about Anadarko, 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 commercially operate the drilling prospects
identified in this news release. See 'Risk Factors' in the company's 2010
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.
Anadarko Petroleum Corporation
Certain Items Affecting Comparability
Quarter Ended
March 31, 2011
-------------------------
Before After Per Share
millions except per-share amounts Tax Tax (diluted)
------- ------- -------
Unrealized gains (losses) on derivatives, net* $ (253) $ (160) $ (0.32)
Other general and administrative items, net 24 15 0.03
Impairments (2) (2) --
------- ------- -------
$ (231) $ (147) $ (0.29)
======= ======= =======
* For the quarter ended March 31, 2011, before-tax unrealized gains
(losses) on derivatives, net includes $(313) million related to commodity
derivatives, $59 million related to other derivatives, and $1 million
related to gathering, processing, and marketing sales.
Quarter Ended
March 31, 2010
-------------------------
Before After Per Share
millions except per-share amounts Tax Tax (diluted)
------- ------- -------
Unrealized gains (losses) on derivatives, net* $ 545 $ 348 $ 0.71
Loss on early retirements of debt (40) (25) (0.05)
Gains (losses) on divestitures and other, net (13) (7) (0.01)
Impairments (12) (8) (0.02)
Change in uncertain tax positions (FIN48) -- (4) (0.01)
------- ------- -------
$ 480 $ 304 $ 0.62
======= ======= =======
* For the quarter ended March 31, 2010, before-tax unrealized gains
(losses) on derivatives, net includes $567 million related to commodity
derivatives, $(29) million related to other derivatives, and $7 million
related to gathering, processing, and marketing sales.
Reconciliation of GAAP to Non-GAAP Measures
Below are reconciliations of cash provided by operating activities (GAAP)
to discretionary cash flow from operations and free cash flow (non-GAAP),
and net income (loss) attributable to common stockholders (GAAP) to
adjusted net income (loss) (non-GAAP) as required under Regulation G of the
Securities Exchange Act of 1934. Management uses discretionary cash flow
from operations and free 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.
Management uses adjusted net income (loss) to evaluate the Company's
operational trends and performance.
Quarter Ended
March 31,
----------------
millions 2011 2010
------- -------
Net cash provided by operating activities $ 1,289 $ 1,317
Add back:
Change in accounts receivable 251 27
Change in accounts payable and accrued expenses 177 281
Change in other items--net (43) (95)
------- -------
Discretionary cash flow from operations $ 1,674 $ 1,530
======= =======
Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures
Quarter Ended
March 31,
----------------
millions 2011 2010
------- --------
Discretionary cash flow from operations $ 1,674 $ 1,530
Less: Capital expenditures* 1,587 1,239
------- --------
Free cash flow $ 87 $ 291
======= ========
* Includes Western Gas Partners, LP (WES) capital expenditures of $317
million and $4 million for the quarters ended March 31, 2011, and 2010,
respectively.
Quarter Ended Quarter Ended
March 31, 2011 March 31, 2010
---------------- ----------------
After Per Share After Per Share
millions except per-share amounts Tax (diluted) Tax (diluted)
------ -------- ------- --------
Net income (loss) attributable to
common stockholders $ 216 $ 0.43 $ 716 $ 1.43
Less: Certain items affecting
comparability (147) (0.29) 304 0.62
------ -------- ------- --------
Adjusted net income (loss) $ 363 $ 0.72 $ 412 $ 0.81
====== ======== ======= ========
Presented below is a reconciliation of total debt (GAAP) to net debt (non-
GAAP). Management uses net debt as a measure of the Company's outstanding
debt obligations that would not be readily satisfied by its cash and cash
equivalents on hand.
millions March 31,
2011
--------
Total debt $ 13,193
Less: Cash and cash equivalents 3,460
--------
Net debt $ 9,733
========
Net debt $ 9,733
Stockholders' equity 20,909
--------
Adjusted capitalization $ 30,642
========
Net debt to adjusted capitalization ratio 32%
========
Anadarko Petroleum Corporation
(Unaudited)
Quarter Ended
Summary Financial Information March 31,
----------------
millions except per-share amounts 2011 2010
------- -------
Consolidated Statements of Income
------- -------
Revenues and Other
------- -------
Gas sales $ 854 $ 1,081
Oil and condensate sales 1,807 1,502
Natural-gas liquids sales 333 274
Gathering, processing, and marketing sales 230 273
Gains (losses) on divestitures and other, net 29 9
------- -------
Total 3,253 3,139
======= =======
Costs and Expenses
------- -------
Oil and gas operating 232 187
Oil and gas transportation and other 209 191
Exploration 179 155
Gathering, processing, and marketing 171 183
General and administrative 235 210
Depreciation, depletion, and amortization 985 981
Other taxes 344 301
Impairments 2 12
------- -------
Total 2,357 2,220
======= =======
Operating Income (Loss) 896 919
======= =======
Other (Income) Expense
------- -------
Interest expense 220 224
(Gains) losses on commodity derivatives, net 256 (588)
(Gains) losses on other derivatives, net (59) 29
Other (income) expense, net (24) 9
------- -------
Total 393 (326)
======= =======
Income (Loss) Before Income Taxes 503 1,245
======= =======
Income Tax Expense (Benefit) 266 517
======= =======
Net Income (Loss) $ 237 $ 728
======= =======
Net Income Attributable to Noncontrolling Interests 21 12
======= =======
Net Income (Loss) Attributable to Common Stockholders $ 216 $ 716
======= =======
Per Common Share:
======= =======
Net income (loss) attributable to common
stockholders--basic $ 0.43 $ 1.44
Net income (loss) attributable to common
stockholders--diluted $ 0.43 $ 1.43
======= =======
Average Number of Common Shares Outstanding--Basic 497 493
======= =======
Average Number of Common Shares Outstanding--Diluted 499 496
======= =======
Exploration Expense
======= =======
Dry hole expense $ 16 $ 25
Impairments of unproved properties 74 88
Geological and geophysical expense 48 3
Exploration overhead and other 41 39
------- -------
Total $ 179 $ 155
======= =======
Anadarko Petroleum Corporation
(Unaudited)
Summary Financial Information Quarter Ended March 31,
------------------------
millions 2011 2010
----------- -----------
Cash Flows from Operating Activities
----------- -----------
Net income (loss) $ 237 $ 728
Depreciation, depletion, and amortization 985 981
Deferred income taxes 73 154
Dry hole expense and impairments of unproved
properties 90 113
Impairments 2 12
(Gains) losses on divestitures, net -- (13)
Unrealized (gains) losses on derivatives, net 253 (545)
Other 34 100
----------- -----------
Discretionary Cash Flow from Operations 1,674 1,530
(Increase) decrease in accounts receivable (251) (27)
Increase (decrease) in accounts payable and
accrued expenses (177) (281)
Other items--net 43 95
----------- -----------
Net Cash Provided By Operating Activities $ 1,289 $ 1,317
=========== ===========
=========== ===========
Capital Expenditures $ 1,587 $ 1,239
----------- -----------
March 31, December 31,
millions 2011 2010
Condensed Balance Sheets
----------- -----------
Cash and cash equivalents $ 3,460 $ 3,680
Other current assets 3,227 2,995
Net properties and equipment 38,423 37,957
Other assets 1,537 1,616
Goodwill and other intangible assets 5,366 5,311
----------- -----------
Total Assets $ 52,013 $ 51,559
----------- -----------
Current debt $ 424 $ 291
Other current liabilities 3,641 3,823
Long-term debt 12,769 12,722
Other long-term liabilities 13,395 13,284
Stockholders' equity 20,909 20,684
Noncontrolling interests 875 755
----------- -----------
Total Liabilities and Equity $ 52,013 $ 51,559
=========== ===========
Capitalization
----------- -----------
Total debt $ 13,193 $ 13,013
Stockholders' equity 20,909 20,684
----------- -----------
Total $ 34,102 $ 33,697
=========== ===========
Capitalization Ratios
----------- -----------
Total debt 39% 39%
Stockholders' equity 61% 61%
=========== ===========
Anadarko Petroleum Corporation
(Unaudited)
Sales Volumes and Prices
Average Daily Volumes Sales Volumes
----------------------- -----------------------
Crude Crude
Oil & Oil &
Natural Conden- Natural Conden-
Gas sate NGLs Gas sate NGLs
MMcf/d MBbls/d MBbls/d Bcf MMBbls MMBbls
------- ------- ------- ------- ------- -------
Quarter Ended March 31,
2011
United States 2,412 131 76 217 12 7
Algeria 55 5
Other International 26 2
------- ------- ------- ------- ------- -------
Total 2,412 212 76 217 19 7
------- ------- ------- ------- ------- -------
Quarter Ended March 31,
2010
United States 2,393 139 65 215 12 6
Algeria 69 6
Other International 14 2
------- ------- ------- ------- ------- -------
Total 2,393 222 65 215 20 6
------- ------- ------- ------- ------- -------
Average Sales Price
-----------------------
Crude
Oil &
Natural Conden-
Gas sate NGLs
Per Mcf Per Bbl Per Bbl
------- ------- -------
Quarter Ended March 31,
2011
United States $ 3.93 $ 91.56 $ 48.86
Algeria 98.45
Other International 101.66
------- ------- -------
Total $ 3.93 $ 94.58 $ 48.86
------- ------- -------
Quarter Ended March 31,
2010
United States $ 5.02 $ 74.98 $ 46.64
Algeria 76.04
Other International 73.16
------- ------- -------
Total $ 5.02 $ 75.18 $ 46.64
------- ------- -------
Average
Daily Sales
Volumes Volumes
MBOE/d MMBOE
--------- --------
Quarter Ended March 31, 2011 690 62
Quarter Ended March 31, 2010 686 62
Sales Revenue and Commodity Derivatives
Sales Commodity Derivatives Gain (Loss)
----------------------- ----------------------------------
Crude Oil
Natural Gas & Condensate
Crude Oil ---------------- ----------------
Natural & Conden- Un- Un-
millions Gas sate NGLs Realized realized Realized realized
------- ------- ------- -------- ------- ------- -------
Quarter Ended
March 31, 2011
United States $ 854 $ 1,080 $ 333 $ 72 $ (47) $ (12) $ (275)
Algeria 491 (3) 9
Other
International 236
------- ------- ------- -------- ------- ------- -------
Total $ 854 $ 1,807 $ 333 $ 72 $ (47) $ (15) $ (266)
------- ------- ------- -------- ------- ------- -------
Quarter Ended
March 31, 2010
United States $ 1,081 $ 935 $ 274 $ 19 $ 566 $ (1) $ (5)
Algeria 470 3 6
Other
International 97
------- ------- ------- -------- ------- ------- -------
Total $ 1,081 $ 1,502 $ 274 $ 19 $ 566 $ 2 $ 1
------- ------- ------- -------- ------- ------- -------
Anadarko Petroleum Corporation
Financial and Operating External Guidance
As of May 2, 2011
2nd Qtr Total Year
Guidance Guidance
-------------- --------------
Units Units
-------------- --------------
Total Sales (MMBOE) 60 - 62 244 - 248
Crude Oil (MBbl/d): 224 - 231 215 - 219
United States 129 - 131 127 - 129
Algeria 61 - 64 53 - 54
Other International 34 - 36 35 - 37
Natural Gas (MMcf/d):
United States 2,250 - 2,300 2,325 - 2,375
Natural Gas Liquids (MBbl/d):
United States 61 - 64 65 - 67
-------------- --------------
$ / Unit $ / Unit
-------------- --------------
Price Differentials vs NYMEX (w/o hedges)
Crude Oil ($/Bbl): - - 1.00 (1.00) - 1.00
United States (3.00) - (5.00) (5.00) - (7.00)
Algeria 8.00 - 10.00 6.00 - 8.00
Other International 6.00 - 8.00 4.00 - 6.00
Natural Gas ($/Mcf):
United States (0.15) - (0.25) (0.20) - (0.30)
-------------- --------------
Financial and Operating External Guidance
As of May 2, 2011
2nd Qtr Total Year
Guidance Guidance
-------------- --------------
$ MM $ MM
-------------- --------------
Other Revenues:
Marketing and Gathering Margin 50 - 70 225 - 275
Minerals and Other 35 - 45 110 - 140
-------------- --------------
Costs and Expenses:
$ / Boe $ / Boe
-------------- --------------
Oil & Gas Direct Operating 3.80 - 4.20 3.80 - 4.20
Oil & Gas Transportation/Other 3.40 - 3.65 3.40 - 3.65
Depreciation, Depletion and Amortization 15.25 - 15.75 15.25 - 15.75
Production Taxes (% of Revenue) 11.5% - 12.5% 10.0% - 12.0%
$ MM $ MM
-------------- --------------
General and Administrative 240 - 260 950 - 1,050
Exploration Expense
Non-Cash 100 - 150 600 - 700
Cash 75 - 100 325 - 375
Interest Expense (net) 210 - 230 850 - 875
Other (Income) Expense - - 20 - - 80
Tax Rate
Algeria (All Current) 55% - 65% 55% - 65%
Rest of Company (All Deferred) 35% - 45% 35% - 45%
-------------- --------------
Avg. Shares Outstanding (MM)
Basic 495 - 497 496 - 498
Diluted 497 - 499 498 - 500
$ MM $ MM
-------------- --------------
Capital Investment *
Capital Expenditures 1,750 - 1,900 6,060 - 6,450
Capitalized Interest 30 - 40 140 - 150
* Excludes Western Gas Partners, LP (WES)
Anadarko Petroleum Corporation
Commodity Hedge Positions (Excluding Natural Gas Basis)
As of May 2, 2011
Weighted Average Price per MMBtu
Volume -------------------------------
(thousand Floor Floor Ceiling
MMBtu/d) Sold Purchased Sold
--------- ------- --------- -------
Natural Gas
Three-Way Collars
2011 480 $ 5.00 $ 6.50 $ 8.29
2012 500 $ 5.00 $ 6.50 $ 9.03
Fixed Price - Financial
2011 90 $ 6.17
Weighted Average Price per barrel
Volume -------------------------------
(thousand Floor Floor Ceiling
MMBtu/d) Sold Purchased Sold
--------- ------- --------- -------
Crude Oil
Three-Way Collars
2011 126 $ 64.29 $ 79.29 $ 99.95
2012 2 $ 35.00 $ 50.00 $ 92.50
Anadarko Petroleum Corporation
Natural Gas Basis Hedge Positions
As of May 2, 2011
Volume
(thousand Price per
MMBtu/d) MMBtu
---------- ---------
Basis Swaps
2011
Mid Continent 15 $ (0.76)
Rocky Mountains 30 $ (2.22)
---------- ---------
45 $ (1.74)
Interest Rate Derivatives*
As of May 2, 2011
Start Rate Rate
Instrument Notional Amt. Date Maturity Paid Received
--------------- -------- -------- ---- --------
Swap $ 750 Million Oct-2011 Oct-2021 4.72% 3M LIBOR
Swap $ 1,250 Million Oct-2011 Oct-2041 4.83% 3M LIBOR
Swap $ 250 Million Oct-2012 Oct-2022 4.91% 3M LIBOR
Swap $ 750 Million Oct-2012 Oct-2042 4.80% 3M LIBOR
--------------- -------- -------- ---- --------
*Excludes Western Gas Partners, LP (WES)
ANADARKO CONTACTS
MEDIA:
John Christiansen
Email Contact
832.636.8736
Brian Cain
Email Contact
832.636.3404
INVESTORS:
John Colglazier
Email Contact
832.636.2306
Dean Hennings
Email Contact
832.636.2462
Wayne Rodrigs
Email Contact
832.636.2305
