Anadarko Announces First-Quarter 2013 Results
Increases Full-Year 2013 Sales-Volumes Guidance
HOUSTON, TX -- (Marketwired) -- 05/06/13 -- Anadarko Petroleum Corporation (NYSE: APC) today announced first-quarter 2013 net income attributable to common stockholders of $460 million, or $0.91 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 $87 million, or $0.17 per share (diluted), on an after-tax basis.(1) Cash flow from operating activities in the first quarter of 2013 was approximately $2.503 billion, and discretionary cash flow totaled $2.056 billion.(2)
First-Quarter 2013 Highlights
- Achieved record daily sales volumes of 793,000 barrels of oil equivalent (BOE)
- Monetized assets totaling more than $1.2 billion
- Initiated oil production at the El Merk project in Algeria
- Delivered outstanding deepwater success in the Gulf of Mexico's Shenandoah Basin
"The record first-quarter 2013 results reflect our commitment to accelerate value by increasing production in our core operating areas, selectively monetizing assets and delivering large-scale projects on budget," said Anadarko President and CEO Al Walker. "We achieved a 16-percent year-over-year increase in oil sales volumes, primarily driven by 25,000 barrels-per-day growth from our U.S. onshore assets, plus the benefit of an accelerated tanker lifting at Jubilee. In addition, we monetized more than $1.2 billion of assets, including the $860 million carried-interest agreement at Heidelberg, and achieved first oil at our El Merk development in Algeria. I'm also very proud of our very active global deepwater exploration program that continues to deliver industry-leading success and differentiating value."
Operations Summary
Anadarko reported total sales volumes of 71 million BOE, or 793,000 BOE per day, during the first quarter. Liquids sales volumes averaged 345,000 BOE per day, which includes 257,000 barrels of oil per day. Natural gas volumes averaged approximately 2.7 billion cubic feet per day. As a result of this performance, Anadarko has increased its full-year 2013 sales-volumes guidance to a range of 279 to 287 million BOE from a previous range of 279 to 285 million BOE.
Anadarko's Wattenberg field achieved record quarterly sales volumes, averaging more than 113,000 BOE per day, which included a 45-percent increase in liquids sales volumes over the first quarter of 2012. The Eagleford Shale also delivered record performance and surpassed a production milestone of 50 million BOE during the quarter, with total liquids sales volumes averaging approximately 28,000 barrels per day, representing a 60-percent increase over the first quarter of 2012. Anadarko also achieved record sales volumes during the quarter in the Marcellus Shale, the East Texas Horizontal play and in its Permian oil assets.
During the quarter, Anadarko and its partners achieved first oil at the El Merk project in Algeria. Production from El Merk is expected to steadily increase throughout 2013 to a net 30,000 barrels of oil per day as additional production facilities and fields are brought on line.
Exploration Summary
Anadarko and its partners announced two new successful deepwater wells in the Gulf of Mexico's emerging Shenandoah Basin. Anadarko's Shenandoah-2 well, located in Walker Ridge block 51, encountered more than 1,000 net feet of oil pay, establishing Shenandoah as one of the company's largest Gulf of Mexico oil discoveries to date. In addition, the Coronado well, located in Walker Ridge block 98, encountered more than 400 net feet of oil pay, while drilling activity at the nearby Yucatan well in Walker Ridge block 95 is ongoing. Subsequent to quarter end, Anadarko announced the Phobos discovery, located in Sigsbee Escarpment block 39. The well encountered approximately 250 net feet of oil pay in the Wilcox formation, and future appraisal activity is now being evaluated.
Offshore Mozambique, Anadarko discovered a new, distinct natural gas reservoir in its Offshore Area 1 block. The Orca-1 discovery well, announced in April, encountered more than 190 net feet of natural gas pay and provides additional options and flexibility for future development.
The company is continuing its active worldwide deepwater exploration program with six deepwater wells currently drilling.
Financial Summary
Anadarko ended the quarter with approximately $3.7 billion of cash on hand and also improved its net-debt-to-adjusted-capitalization ratio(2) to 32 percent at the end of the first quarter compared to 34 percent at the end of 2012. In addition to the $1.2 billion of monetizations, Anadarko also completed the sale of its Liberty and Rome natural gas gathering systems in the Marcellus Shale to its subsidiary, Western Gas Partners, LP (NYSE: WES), for total consideration of $490 million.
Operations Report
For more details on Anadarko's operations and exploration program, please refer to the comprehensive report on first-quarter 2013 activity. The report is available at www.anadarko.com on the Investor Relations page.
Conference Call Tomorrowat 9 a.m. CDT, 10 a.m. EDT
Anadarko will host a conference call on Tuesday, May 7, 2013, 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 2013. The dial-in number is 855.812.0464 in the United States, or 970.300.2271 internationally. The confirmation number is 36701180. 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 be available on the website for approximately 30 days following the conference call.
Financial Data
Eight pages of summary financial data follow, including current hedge positions and updated financial and 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 2012, the company had approximately 2.56 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 drill, develop and commercially operate the drilling prospects identified in this news release. See "Risk Factors" in the company's 2012 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, 2013
-------------------------------
Before After Per Share
millions except per-share amounts Tax Tax (diluted)
--------- --------- ---------
Unrealized gains (losses) on derivatives,
net* $ (246) $ (156) $ (0.31)
Gains (losses) on divestitures, net 144 90 0.18
Impairments (29) (19) (0.04)
Algeria exceptional profits tax settlement (33) - -
Deepwater Horizon settlement and related
costs (3) (2) -
--------- --------- ---------
$ (167) $ (87) $ (0.17)
========= ========= =========
* For the quarter ended March 31, 2013, before-tax unrealized gains
(losses) on derivatives, net includes $(334) million related to commodity
derivatives, $92 million related to other derivatives, and $(4) million
related to gathering, processing, and marketing sales.
Quarter Ended March 31, 2012
-------------------------------
Before After Per Share
millions except per-share amounts Tax Tax (diluted)
--------- --------- ---------
Unrealized gains (losses) on derivatives,
net* $ 142 $ 90 $ 0.18
Gains (losses) on divestitures, net (17) (11) (0.02)
Impairments, including unproved properties (53) (34) (0.07)
Change in uncertain tax positions (FIN 48) - 12 0.03
Algeria exceptional profits tax settlement 1,804 1,804 3.60
Tronox damage claim settlement (275) (175) (0.35)
Deepwater Horizon settlement and related
costs (8) (5) (0.01)
--------- --------- ---------
$ 1,593 $ 1,681 $ 3.36
========= ========= =========
* For the quarter ended March 31, 2012, before-tax unrealized gains
(losses) on derivatives, net includes $(89) million related to commodity
derivatives, $236 million related to other derivatives, and $(5) 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 (non-GAAP), free cash flow
(non-GAAP), and adjusted free cash flow (non-GAAP), as well as 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 because it is useful in comparisons of oil and gas exploration
and production companies as it excludes fluctuations in assets and
liabilities. Management uses free cash flow and adjusted free cash flow to
demonstrate the Company's ability to internally fund capital expenditures
and to service or incur additional debt. Management uses adjusted net
income (loss) to evaluate the Company's operational trends and
performance.
Quarter Ended
--------------------
March 31,
millions 2013 2012
--------- ---------
Net cash provided by operating activities $ 2,503 $ 1,891
Add back
Deepwater Horizon settlement and related costs 3 (22)
Algeria exceptional profits tax settlement (450) -
Change in accounts receivable (40) 27
Change in accounts payable and accrued expenses 158 258
Change in other items-net (118) (232)
--------- ---------
Discretionary cash flow from operations $ 2,056 $ 1,922
========= =========
Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures
Quarter Ended
March 31,
--------------------
millions 2013 2012
---------- ---------
Discretionary cash flow from operations $ 2,056 $ 1,922
Less capital expenditures* 1,747 1,790
---------- ---------
Free cash flow $ 309 $ 132
========== =========
Collection of Algeria exceptional profits tax
receivable 450 -
---------- ---------
Adjusted free cash flow $ 759 $ 132
========== =========
* Includes Western Gas Partners, LP (WES) capital expenditures of $299
million and $98 million for the three months ended March 31, 2013 and 2012,
respectively.
Quarter Ended Quarter Ended
March 31, 2013 March 31, 2012
-------------------- --------------------
millions except per-share Per Share Per Share
amounts After Tax (diluted) After Tax (diluted)
--------- --------- ---------- ---------
Net income (loss) attributable
to common stockholders $ 460 $ 0.91 $ 2,156 $ 4.28
Certain items affecting
comparability (87) (0.17) 1,681 3.36
--------- --------- ---------- ---------
Adjusted net income (loss) $ 547 $ 1.08 $ 475 $ 0.92
========= ========= ========== =========
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,
2013
---------
Total debt $ 13,663
Less cash and cash equivalents 3,735
---------
Net debt $ 9,928
=========
Net debt $ 9,928
Stockholders' equity 21,090
---------
Adjusted capitalization $ 31,018
=========
---------
Net debt to adjusted capitalization ratio 32%
=========
Anadarko Petroleum Corporation
(Unaudited)
Quarter Ended
Summary Financial Information March 31,
--------------------------
millions except per-share amounts 2013 2012
------------ ------------
Consolidated Statements of Income
Revenues and Other
Natural-gas sales $ 807 $ 573
Oil and condensate sales 2,377 2,244
Natural-gas liquids sales 303 342
Gathering, processing, and marketing sales 231 253
Gains (losses) on divestitures and other, net 175 35
------------ ------------
Total 3,893 3,447
============ ============
Costs and Expenses
------------ ------------
Oil and gas operating 247 242
Oil and gas transportation and other 255 240
Exploration 264 244
Gathering, processing, and marketing 199 189
General and administrative 272 269
Depreciation, depletion, and amortization 1,022 930
Other taxes 280 377
Impairments 29 50
Algeria exceptional profits tax settlement 33 (1,804)
Deepwater Horizon settlement and related costs 3 8
------------ ------------
Total 2,604 745
============ ============
Operating Income (Loss) 1,289 2,702
============ ============
Other (Income) Expense
------------ ------------
Interest expense 164 186
(Gains) losses on derivatives, net 191 (284)
Other (income) expense, net (6) 265
------------ ------------
Total 349 167
============ ============
Income (Loss) Before Income Taxes 940 2,535
============ ============
Income Tax Expense (Benefit) 456 352
============ ============
Net Income (Loss) $ 484 $ 2,183
============ ============
Net Income Attributable to Noncontrolling
Interests 24 27
============ ============
Net Income (Loss) Attributable to Common
Stockholders $ 460 $ 2,156
============ ============
Per Common Share
============ ============
Net income (loss) attributable to common
stockholders-basic $ 0.91 $ 4.30
Net income (loss) attributable to common
stockholders-diluted $ 0.91 $ 4.28
============ ============
Average Number of Common Shares Outstanding-
Basic 501 499
============ ============
Average Number of Common Shares Outstanding-
Diluted 503 501
============ ============
============ ============
Exploration Expense
------------ ------------
Dry hole expense $ 158 $ 89
Impairments of unproved properties 19 60
Geological and geophysical expense 37 35
Exploration overhead and other 50 60
------------ ------------
Total $ 264 $ 244
============ ============
Anadarko Petroleum Corporation
(Unaudited)
Quarter Ended
Summary Financial Information March 31,
--------------------------
millions 2013 2012
------------ ------------
Cash Flows from Operating Activities
------------ ------------
Net income (loss) $ 484 $ 2,183
Depreciation, depletion, and amortization 1,022 930
Deferred income taxes 162 210
Dry hole expense and impairments of unproved
properties 177 149
Impairments 29 50
(Gains) losses on divestitures, net (144) 17
Unrealized (gains) losses on derivatives, net 246 (142)
Deepwater Horizon settlement and related costs 3 8
Algeria exceptional profits tax settlement 33 (1,804)
Tronox-related contingent loss - 275
Other 44 46
------------ ------------
Discretionary Cash Flow from Operations 2,056 1,922
Deepwater Horizon settlement and related costs (3) 22
Algeria exceptional profits tax settlement 450 -
(Increase) decrease in accounts receivable 40 (27)
Increase (decrease) in accounts payable and
accrued expenses (158) (258)
Other items-net 118 232
------------ ------------
Net Cash Provided by Operating Activities $ 2,503 $ 1,891
============ ============
============ ============
Capital Expenditures $ 1,747 $ 1,790
------------ ------------
March 31, December 31,
millions 2013 2012
------------ ------------
Condensed Balance Sheets
------------ ------------
Cash and cash equivalents $ 3,735 $ 2,471
Accounts receivable, net of allowance 2,760 2,747
Algeria exceptional profits tax settlement 280 730
Other current assets 535 847
Net properties and equipment 38,970 38,398
Other assets 1,630 1,716
Goodwill and other intangible assets 5,678 5,680
------------ ------------
Total Assets $ 53,588 $ 52,589
------------ ------------
Current asset retirement obligations 387 298
Other current liabilities 3,685 3,696
Long-term debt 13,663 13,269
Deferred income taxes 8,964 8,759
Other long-term liabilities 4,559 4,685
Stockholders' equity 21,090 20,629
Noncontrolling interests 1,240 1,253
------------ ------------
Total Liabilities and Equity $ 53,588 $ 52,589
============ ============
Capitalization
------------ ------------
Total debt $ 13,663 $ 13,269
Stockholders' equity 21,090 20,629
------------ ------------
Total $ 34,753 $ 33,898
============ ============
Capitalization Ratios
------------ ------------
Total debt 39% 39%
Stockholders' equity 61% 61%
============ ============
Anadarko Petroleum Corporation
(Unaudited)
Sales Volumes and
Prices
Average Daily Volumes Sales Volumes
-------------------------- --------------------------
Crude Oil Crude Oil
Natural & Natural &
Gas Condensate NGLs Gas Condensate NGLs
MMcf/d MBbls/d MBbls/d Bcf MMBbls MMBbls
------- ---------- ------- ------- ---------- -------
Quarter Ended March
31, 2013
United States 2,689 159 88 242 14 8
Algeria - 53 - - 5 -
Other International - 45 - - 4 -
------- ---------- ------- ------- ---------- -------
Total 2,689 257 88 242 23 8
------- ---------- ------- ------- ---------- -------
Quarter Ended March
31, 2012
United States 2,416 138 80 220 12 7
Algeria - 50 - - 5 -
Other International - 33 - - 3 -
------- ---------- ------- ------- ---------- -------
Total 2,416 221 80 220 20 7
------- ---------- ------- ------- ---------- -------
Sales Volumes and
Prices
Average Sales Price
--------------------------
Crude Oil
Natural &
Gas Condensate NGLs
Per Mcf Per Bbl Per Bbl
------- ---------- -------
Quarter Ended March
31, 2013
United States $ 3.33 $ 97.32 $ 38.17
Algeria - 112.91 -
Other International - 111.32 -
------- ---------- -------
Total $ 3.33 $ 102.97 $ 38.17
------- ---------- -------
Quarter Ended March
31, 2012
United States $ 2.60 $ 105.75 $ 47.09
Algeria - 119.57 -
Other International - 120.64 -
------- ---------- -------
Total $ 2.60 $ 111.07 $ 47.09
------- ---------- -------
Average
Daily Sales
Volumes Volumes
MBOE/d MMBOE
------- ----------
Quarter Ended March
31, 2013 793 71
Quarter Ended March
31, 2012 704 64
Sales Revenue and Commodity Derivatives
Sales
--------------------------
Crude Oil
Natural &
millions Gas Condensate NGLs
------- ---------- -------
Quarter
Ended March
31, 2013
United
States $ 807 $ 1,393 $ 303
Algeria - 537 -
Other
International
- 447 -
------- ---------- -------
Total $ 807 $ 2,377 $ 303
------- ---------- -------
Quarter
Ended March
31, 2012
United
States $ 573 $ 1,339 $ 342
Algeria - 538 -
Other
International
- 367 -
------- ---------- -------
Total $ 573 $ 2,244 $ 342
------- ---------- -------
Sales Revenue and Commodity Derivatives
Commodity Derivatives Gain (Loss)
--------------------------------------------------------------
Crude Oil &
Natural Gas Condensate NGLs
------------------- -------------------- -------------------
millions Realized Unrealized Realized Unrealized Realized Unrealized
-------- ---------- -------- ---------- -------- ----------
Quarter
Ended March
31, 2013
United
States $ 67 $ (269) $ 1 $ (60) $ 2 $ (5)
Algeria - - (19) - - -
Other
International
- - - - - -
-------- ---------- -------- ---------- -------- ----------
Total $ 67 $ (269) $ (18) $ (60) $ 2 $ (5)
-------- ---------- -------- ---------- -------- ----------
Quarter
Ended March
31, 2012
United
States $ 170 $ 86 $ (5) $ (173) $ - $ (2)
Algeria - - (28) - - -
Other
International
- - - - - -
-------- ---------- -------- ---------- -------- ----------
Total $ 170 $ 86 $ (33) $ (173) $ - $ (2)
-------- ---------- -------- ---------- -------- ----------
Anadarko Petroleum Corporation
Financial and Operating External Guidance
As of May 6, 2013
2nd Qtr Total Year
Guidance Guidance
----------------- -----------------
Units Units
----------------- -----------------
Total Sales (MMBOE) 67 - 69 279 - 287
Total Sales (MBOE/d) 736 - 758 764 - 786
Crude Oil (MBbl/d): 230 - 234 264 - 268
United States 154 - 158 169 - 171
Algeria 47 - 48 59 - 61
Other International 27 - 29 34 - 36
Natural Gas (MMcf/d):
United States 2,575 - 2,650 2,510 - 2,540
Natural Gas Liquids (MBbl/d):
United States 73 - 79 80 - 95
----------------- -----------------
$ / Unit $ / Unit
----------------- -----------------
Price Differentials vs NYMEX (w/o hedges)
Crude Oil ($/Bbl): 3.00 - 6.00 5.00 - 8.00
United States 1.00 - 3.00 1.00 - 3.00
Algeria 10.00 - 12.00 12.00 - 15.00
Other International 10.00 - 12.00 10.00 - 13.00
Natural Gas ($/Mcf):
United States (0.05) - (0.15) (0.05) - (0.15)
----------------- -----------------
Anadarko Petroleum Corporation
Financial and Operating External Guidance
As of May 6, 2013
2nd Qtr Total Year
Guidance Guidance *
--------------- ---------------
$ MM $ MM
--------------- ---------------
Other Revenues:
Marketing and Gathering Margin 25 - 35 150 - 170
Minerals and Other 25 - 35 120 - 140
--------------- ---------------
Costs and Expenses:
$ / BOE $ / BOE
--------------- ---------------
Oil & Gas Direct Operating 4.00 - 4.20 3.90 - 4.05
Oil & Gas Transportation/Other 3.75 - 3.95 3.55 - 3.75
Depreciation, Depletion and Amortization 14.25 - 14.50 14.50 - 14.75
Production Taxes (% of Product Revenue) 7.5% - 8.5% 7.5% - 9.5%
$ MM $ MM
--------------- ---------------
General and Administrative 280 - 290 1,050 - 1,150
Exploration Expense
Non-Cash 150 - 175 900 - 1,000
Cash 105 - 115 475 - 525
Interest Expense (net) 185 - 190 710 - 720
Other (Income)/Expense 15 - 25 75 - 95
Tax Rate:
Algeria (All current) 45% - 50% 45% - 50%
Rest of Company (10% Current for 2Q and
20% for FY) 45% - 55% 45% - 55%
--------------- ---------------
Avg. Shares Outstanding (MM):
Basic 501 - 502 502 - 503
Diluted 504 - 505 504 - 505
--------------- ---------------
Capital Investment (Excluding Western Gas
Partners, LP): $ MM $ MM
--------------- ---------------
APC Capital Expenditures 1,700 - 1,900 7,200 - 7,600
* Excludes items affecting comparability
Anadarko Petroleum Corporation
Commodity Hedge Positions (Excluding Natural Gas Basis)
As of May 6, 2013
Weighted Average Price per
Barrel
-----------------------------
Volume Floor Floor Ceiling
(MBbl/d) Sold Purchased Sold
--------- --------- --------- ---------
Crude Oil
Three-Way Collars
2013
Brent 26 $ 85.00 $ 105.00 $ 125.15
Fixed Price - Financial
2013
Brent 61 $ 108.72
WTI 47 $ 94.43
--------- ---------
108 $ 102.50
Weighted Average Price per
MMBtu
-----------------------------
Volume
(thousand Floor Floor Ceiling
MMBtu/d) Sold Purchased Sold
--------- --------- --------- ---------
Natural Gas
Two-Way Collars
2013 (April - October) 600 n/a $ 3.18 $ 4.00
Three-Way Collars
2014 600 $ 2.75 $ 3.75 $ 5.01
Fixed Price - Financial
2013 1,185 $ 4.00
2014 600 $ 4.26
Interest Rate Derivatives
As of May 6, 2013
Instrument Notional Amt. Start Date Maturity Rate Paid Rate Received
----------- -------------- ----------- ----------- ---------- --------------
Swap $750 Million June 2014 June 2024 6.00% 3M LIBOR
Swap $1,100 Million June 2014 June 2044 5.57% 3M LIBOR
Swap $50 Million Sept. 2016 Sept. 2026 5.91% 3M LIBOR
Swap $750 Million Sept. 2016 Sept. 2046 5.86% 3M LIBOR
