Anadarko Announces Second-Quarter 2013 Results

Full-Year Sales-Volumes Guidance Increased by 1 Million BOE

HOUSTON, TX--(Marketwired - Jul 29, 2013) - Anadarko Petroleum Corp. (NYSE: APC) today announced second-quarter 2013 net income attributable to common stockholders of $929 million, or $1.83 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items increased net income by approximately $392 million, or $0.78 per share (diluted), on an after-tax basis.⁽¹⁾ Cash flow from operating activities in the second quarter of 2013 was approximately $2.502 billion, and discretionary cash flow totaled $1.908 billion.⁽²⁾

Second-Quarter 2013 Highlights

• Generated $290 million of adjusted free cash flow⁽²⁾
• Increased U.S. onshore oil volumes by almost 20,000 barrels per day over second-quarter 2012
• Reached milestones at four large-scale oil projects in Algeria, Ghana and the Gulf of Mexico
• Drilled five deepwater discoveries in the Gulf of Mexico and Mozambique

"We continue to have exceptional performance from our portfolio, as evidenced by the results delivered in the second quarter of 2013," said Anadarko Chairman, President and CEO Al Walker. "Our U.S. onshore activities delivered year-over-year oil growth of 25 percent, averaging approximately 97,000 barrels per day during the quarter. We continued to drive significant improvements into our drilling and completions programs, and costs in each category were favorable to our expectations. We reached milestones at four of our large global oil projects, which are advancing on schedule and on budget, and we achieved a success rate of almost 70 percent in our deepwater exploration/appraisal program, including five new discoveries. We also strengthened the balance sheet, improving our net-debt-to-adjusted-capitalization ratio⁽²⁾ to 29 percent compared to 34 percent at the end of 2012."

Operations Summary
Anadarko reported total sales volumes of more than 750,000 barrels of oil equivalent (BOE) per day during the second quarter. Liquids sales volumes averaged 309,000 barrels per day, without the benefit of an expected tanker lifting in Algeria, which is anticipated during the third quarter. Natural gas volumes averaged approximately 2.6 billion cubic feet per day. Anadarko is increasing its full-year 2013 sales volumes guidance to a range of 281 to 287 million BOE, from the previous range of 279 to 287 million BOE.

Anadarko's Wattenberg Horizontal program continued to deliver robust growth during the quarter, driving the field average to more than 60,000 barrels of liquids per day, representing an increase of more than 37 percent over the second quarter of 2012. The company's Eagleford Shale program also delivered higher liquids sales volumes, averaging approximately 32,000 barrels per day, representing a 62-percent increase over the second quarter of 2012. Additionally, Anadarko commenced operations at its 200-million-cubic-feet-per-day Brasada natural gas processing plant, significantly enhancing the company's takeaway capacity in the Eagleford Shale. In Anadarko's liquids-rich East Texas Horizontal program, sales volumes doubled from the second quarter of 2012 to approximately 40,000 BOE per day in the second quarter of 2013.

Mega-Project Summary
Anadarko reached significant milestones at four of its large-scale oil projects during the quarter. The Lucius development in the deepwater Gulf of Mexico remains on track for first oil in the second half of 2014. The company successfully transported its 80,000-barrels-of-oil-per-day (BOPD) Lucius spar from the fabrication yard in Pori, Finland, to Corpus Christi, Texas, with plans to install the spar in Keathley Canyon block 875 during the third quarter of 2013. Construction on the Heidelberg spar, which also has a capacity of 80,000 BOPD, is about 30-percent complete. During the quarter, the company and its partners officially sanctioned the Heidelberg development project and expect to achieve first oil in mid-2016.

In Algeria, the first oil train at El Merk continued to increase production throughout the quarter, and the second oil train is being commissioned. El Merk remains on schedule to ramp toward a net rate of approximately 30,000 barrels per day by the end of 2013.

In Ghana, the government approved the Plan of Development for the TEN (Tweneboa, Enyenra, Ntomme) project during the quarter, which will be the partnership's second major oil development offshore Ghana, with an 80,000-BOPD facility expected to begin production in 2016.

Exploration Summary
Anadarko and its partners drilled five deepwater discoveries during the second quarter -- three in the deepwater Gulf of Mexico and two in Mozambique. In addition to Anadarko's previously announced discoveries at Phobos and Orca, during the second quarter the company also discovered:

• Raptor (Gulf of Mexico; Desoto Canyon block 535) - Encountered approximately 150 net feet of high-quality oil pay in Jurassic reservoirs. Raptor was drilled to a total depth of 22,135 feet in approximately 8,200 feet of water. Data from these activities are being incorporated into the geologic model to evaluate potential appraisal plans. Anadarko operates Raptor with a 50-percent working interest. BHP Billiton Petroleum (Deepwater) Inc. owns a 50-percent working interest.
  
  
• Yucatan (Gulf of Mexico; Walker Ridge block 95) - Encountered more than 120 net feet of oil pay. Yucatan is more than three miles south and syncline separated from the Anadarko-operated Shenandoah discovery and approximately nine miles west of the Coronado discovery, in which Anadarko also owns an interest. The well was drilled to a total depth of 32,250 feet in water depth of approximately 5,800 feet. The partnership is evaluating the results and planning additional appraisal activity. Anadarko owns a 15-percent working interest in Yucatan. The block is operated by Shell with a 70-percent working interest. The other co-owner in the well is INPEX with a 15-percent working interest.
  
  
• Espadarte (Mozambique; Offshore Area 1) - Encountered approximately 280 net feet of natural gas pay in Oligocene and Miocene sands. The well was drilled to a total depth of approximately 11,640 feet in water depth of 1,536 feet. Anadarko operates Espadarte with a 36.5-percent working interest. Co-owners include Mitsui E&P Mozambique Area 1, Limited (20 percent), BPRL Ventures Mozambique B.V. (10 percent), Videocon Mozambique Rovuma 1 Limited (10 percent) and PTT Exploration & Production Plc (8.5 percent). Empresa Nacional de Hidrocarbonetos, ep, owns a 15-percent interest that is carried through the exploration phase.
  
  

Operations Report
For more details on Anadarko's operations and exploration program, please refer to the comprehensive report on second-quarter 2013 activity. The report is available on the Investor Relations page at: www.anadarko.com.

Conference Call Tomorrow at 8 a.m. CDT, 9 a.m. EDT
Anadarko will host a conference call on Tuesday, July 30, 2013, at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) to discuss second-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 16786048. 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 Corp.'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 meet financial and operating guidance, achieve its production targets, successfully manage its capital expenditures, timely complete and commercially operate the projects and drilling prospects identified in this news release, and achieve production and budget expectations on its mega projects. 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.

* For the quarter ended June 30, 2013, before-tax unrealized gains (losses) on derivatives, net includes $373 million related to commodity derivatives, $262 million related to other derivatives, and $6 million related to gathering, processing, and marketing sales.

* For the quarter ended June 30, 2012, before-tax unrealized gains (losses) on derivatives, net includes $157 million related to commodity derivatives, $(374) million related to other derivatives, and $(8) million related to gathering, processing, and marketing sales.

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.

* Includes Western Gas Partners, LP (WES) capital expenditures of $138 million for the quarter ended June 30, 2013, $123 million for the quarter ended June 30, 2012, $437 million for the six months ended June 30, 2013, and $221 million for the six months ended and June 30, 2012.

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.