Anadarko Announces 2011 Capital Program and Guidance, and Reaffirms Five-Year Plan
HOUSTON, TX -- (Marketwire) -- 02/24/11 -- Anadarko Petroleum Corporation (NYSE: APC)
today announced its 2011 capital program and guidance, and provided
additional information on several operating areas.
'We've designed a portfolio that has produced record results in recent
years, and generated significant momentum for continued performance in 2011
and well into the future,' said Jim Hackett, Anadarko Chairman and CEO. 'In
2011, we expect to increase sales volumes to a range of 244 to 248 million
BOE (barrels of oil equivalent), including a projected increase of about 10
percent in liquids volumes that deliver higher margins. Our 2011 capital
spending is projected to be well within anticipated cash flows, based on
today's strip prices, and will enable us to accelerate our proved reserve
additions with a reserve-replacement ratio of more than 150 percent.
Achieving these objectives will keep us on course to meet the five-year
targets we established in March 2010, which include surpassing 3 billion
BOE of proved reserves by year-end 2014, and increasing sales volumes at a
7- to 9-percent five-year CAGR (compounded annual growth rate).'
Total 2011 capital expenditures are expected to be between $5.6 and $6.0
billion. This amount does not include expenditures by Western Gas Partners,
LP (WES), a separate publicly traded entity controlled by Anadarko and
consolidated in its financial statements. An approximate breakout of the
2011 capital program, by area and by type, is included below:
2011 Capital Program
--------------------
By Area By Type
------- -------
U.S. Onshore 55% Near-Term Base 40%
International/Frontier 25% Exploration 25%
Gulf of Mexico 10% Mega Projects 15%
Midstream/Other 10% Shales 10%
Midstream/Other 10%
Shales and Emerging U.S. Onshore Growth Plays
During 2010, Anadarko significantly increased drilling activity, expanded
infrastructure and secured the necessary service agreements to facilitate
rapid growth in the Eagleford and Marcellus shale plays. The company plans
to allocate approximately 10 percent of its 2011 capital program toward
these areas. This level of spending reflects the net benefit of our
existing joint-venture agreement in the Marcellus and also assumes the
near-term completion of a similar agreement in the Eagleford. During 2011,
Anadarko plans to continue accelerating growth in the shale plays and, by
the end of the year, expects shale production to account for approximately
10 percent of the company's total daily sales volumes.
In the liquids-rich Eagleford Shale, Anadarko has increased the average
estimated ultimate recoveries (EURs) of its existing wells to more than
450,000 BOE per well. Already among the largest producers in the Eagleford,
Anadarko plans to accelerate the realization of value from these resources
by doubling its 2010 drilling activity to more than 200 wells planned in
2011.
Anadarko also continues to enhance well performance in the Marcellus Shale,
where EURs are trending toward the higher end of the company's previous
estimates of 4 to 6 billion cubic feet (Bcf) per well. Anadarko expects to
operate 10 rigs in 2011 in the Marcellus and to participate in more than
250 wells during the year. The Marcellus will continue to be the only
domestic dry natural gas field where the company will be actively drilling,
due to the play's proximity to premium natural gas markets that enhance the
already robust economics.
Anadarko also will continue to invest capital in several other emerging
U.S. onshore oil plays. These include the Bone Spring, Avalon Shale and
Wolfcamp plays in the Permian Basin of West Texas, and the horizontal
Niobrara play, primarily within the company's Land Grant acreage in
northeastern Colorado and southeastern Wyoming.
Mega Projects
Anadarko has allocated approximately 15 percent of its 2011 capital budget
to the ongoing development of its sanctioned mega projects. Production at
the Jubilee field offshore Ghana will continue to increase toward capacity
of 120,000 gross barrels of oil per day during the year. Currently, the
field is producing approximately 50,000 gross barrels of oil per day from
four wells. Development activities are ongoing at the company's two other
sanctioned mega projects at Caesar/Tonga in the Gulf of Mexico and El Merk
in Algeria, both of which are expected to achieve first oil in 2012.
Exploration
Consistent with previous years, approximately 25 percent of the 2011
capital program is allocated to exploration. Approximately $1 billion is
expected to be invested in drilling activities, with a focus on the
company's worldwide offshore and deepwater programs, which include
approximately 25 exploration and/or appraisal wells this year. Africa will
continue to be a primary focus area with 12 to 15 wells planned in West
Africa, and another three to five wells planned in the Rovuma Basin
offshore Mozambique.
'With 19 offshore discoveries in the last three years, and two already in
2011, our exploration program is a differentiating value enhancer for our
shareholders,' added Hackett. 'We continue to be among the most active and
successful deepwater explorers in the world, and together with our U.S.
onshore exploration activities, we expect to discover and
de-risk approximately 500 million BOE of net resources as a result of our
2011 exploration program. In addition to finding new resources, we plan to
continue advancing existing discoveries to development with very active
appraisal programs in Mozambique, Ghana, Brazil, Sierra Leone and the Gulf
of Mexico.'
2011 Guidance
Additional details about the company's 2011 guidance, along with updated
hedging schedules, are provided in the tables attached to this news
release.
Conference Call Today at 8 a.m. CST, 9 a.m. EST
Anadarko will host a conference call today, Feb. 24, at 8 a.m. Central
Standard Time (9 a.m. Eastern Standard Time) to discuss its 2011 capital
program and guidance, as well as to reaffirm its five-year objectives. The
dial-in number is 888.680.0892 in the United States or 617.213.4858 for
international calls. The confirmation number is 97996121. 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 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 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; to meet the
long-term goals identified in this news release; to execute the 2011
capital program; and to successfully drill, complete, test and produce the
wells identified in this news release. See 'Risk Factors' in the company's
2010 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.
Cautionary Note to U.S. Investors: Effective January 1, 2010, 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,
2010, 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. You can also
obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's
Web site at www.sec.gov.
Anadarko Petroleum Corporation
Financial and Operating External Guidance
As of February 24, 2011
1st Qtr Total Year
Guidance Guidance
--------------- -------------
Units Units
--------------- -------------
Total Sales (MMBOE) 60 - 62 244 - 248
Crude Oil (MBbl/d) 214 - 222 215 - 219
United States 127 - 130 127 - 129
Algeria 53 - 56 53 - 54
Other International 34 - 36 35 - 37
Natural Gas (MMcf/d)
United States 2,325 - 2,375 2,325 - 2,375
Natural Gas Liquids (MBbl/d)
United States 64 - 67 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) - (0.30) (0.20) - (0.40)
Anadarko Petroleum Corporation
Financial and Operating External Guidance
As of February 24, 2011
1st Qtr Total Year
Guidance Guidance
--------------- -------------
$ MM $ MM
--------------- -------------
Other Revenues
Marketing and Gathering Margin 50 - 80 175 - 225
Minerals and Other 25 - 35 95 - 120
Costs and Expenses
$ / Boe $ / Boe
--------------- -------------
Oil & Gas Direct Operating 3.80 - 4.30 3.80 - 4.30
Oil & Gas Transportation/Other 3.50 - 3.75 3.50 - 3.75
Depreciation, Depletion and Amortization 15.50 - 16.00 15.50 - 16.00
Production Taxes (% of Revenue) 11.0% - 12.0% 10.0% - 12.0%
$ MM $ MM
--------------- -------------
General and Administrative 240 - 260 950 - 1,050
Exploration Expense
Non-Cash 175 - 225 700 - 800
Cash 70 - 90 300 - 350
Interest Expense (net) 210 - 230 850 - 875
Other (Income) Expense -- - 20 -- - 80
Tax Rate
Algeria (All Current) 60% - 65% 60% - 65%
Rest of Company (All Deferred) 35% - 45% 35% - 45%
Avg. Shares Outstanding (MM)
Basic 495 - 497 496 - 498
Diluted 496 - 498 497 - 499
$ MM $ MM
--------------- -------------
Capital Investment*
Capital Expenditures 1,325 - 1,465 5,470 - 5,860
Capitalized Interest 25 - 35 130 - 140
* Excludes WES
Anadarko Petroleum Corporation
Commodity Hedge Positions (Excluding Natural Gas Basis)
As of February 24, 2011
Volume Weighted Average Price per MMBtu
(thousand -----------------------------------------
MMBtu/d) Floor Sold Floor Purchased Ceiling 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
Volume Weighted Average Price per barrel
(thousand ------------------------------------------
MBbls/d) Floor Sold Floor Purchased Ceiling Sold
--------- ---------- --------------- ------------
Crude Oil
Three-Way Collars
2011 126 $ 64.29 $ 79.29 $ 99.95
2012 2 $ 35.00 $ 50.00 $ 92.50
Interest Rate Derivatives
As of February 24, 2011
Instrument Notional Amt. Start Date Maturity Rate Paid Rate 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
Anadarko Contacts
Media:
John Christiansen
Email Contact
832.636.8736
Matt Carmichael
Email Contact
832.636.2845
Investors:
John Colglazier
Email Contact
832.636.2306
Dean Hennings
Email Contact
832.636.2462
