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Quarterly Results

2017 First Quarter
Anadarko Announces First-Quarter 2017 Results

HOUSTON, May 2, 2017 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced its first-quarter 2017 results, reporting a net loss attributable to common stockholders of $318 million, or $0.58 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items increased the net loss by $12 million, or $0.02 per share (diluted), on an after-tax basis.(1) Net cash provided by operating activities in the first quarter of 2017 was $1.12 billion.

FIRST-QUARTER HIGHLIGHTS

  • Increased total year-over-year sales volume by approximately 20 percent on a divestiture-adjusted basis(2)
  • Achieved oil production of 353,000 barrels per day on a divestiture-adjusted basis, bolstered by record oil sales volume in the Deepwater Gulf of Mexico and Delaware Basin(2)
  • Enhanced liquids product mix to 61 percent versus 53 percent year over year, contributing to significantly improved margins
  • Completed Eagleford and Marcellus asset divestitures for net cash proceeds of $2.8 billion, prior to final closing adjustments

"The first quarter of 2017 provides a clear picture of the power of our streamlined portfolio and the three 'Ds', with record oil sales volume, significantly improved margins and strong cash flow," said Al Walker, Anadarko Chairman, President and CEO. "We have largely completed our divestiture program and ended the quarter with nearly $6 billion of cash on hand. These actions have increased our liquids product mix which, combined with the strengthening of commodity prices, substantially expanded our margins year over year. During the quarter, we continued to increase activity in the Delaware and DJ basins, adding six rigs to bring our current total to 21 across the U.S. onshore. In March, we also announced a 1.5-billion-barrel increase to our estimated net resources in the two basins, which now total more than 5 billion BOE. This proven performance, continuing efficiency gains and financial flexibility have us well positioned to deliver a compound annual oil growth rate of better than 15 percent over the next five years at current commodity prices while spending within cash inflows."  

OPERATIONS SUMMARY

Anadarko's first-quarter 2017 sales volume of oil, natural gas and natural gas liquids (NGLs) totaled 72 million BOE, or an average of 795,000 BOE per day. On a divestiture-adjusted basis, sales volume totaled approximately 61 million BOE, or 672,000 BOE per day.(2)

OPERATIONAL HIGHLIGHTS

During the first quarter of 2017, Anadarko continued to accelerate drilling activity in the U.S. onshore. The company achieved an all-time high for oil sales volume in the Delaware Basin, averaging approximately 31,000 barrels of oil per day. The company added five operated rigs during the quarter and has added one more subsequent to quarter-end, bringing the total number of operated rigs in the Delaware Basin to 15. The company continues to take action to establish operatorship in sections where it was not previously determined and expects these activities to result in operatorship of approximately 70 percent within the Area of Mutual Interest. In the DJ Basin, Anadarko's sales volume averaged 242,000 BOE per day. The company added one rig, bringing its total operated rig count to six, all drilling multi-well development pads.

In the Deepwater Gulf of Mexico, Anadarko's sales volume more than doubled year over year to approximately 160,000 BOE per day, reflecting the benefit of last December's property acquisition from Freeport-McMoRan and the continued strong performance at Lucius and Caesar/Tonga. The company continued to advance its hub-and-spoke opportunities, with field production at K2 reaching a nine-year record.  Anadarko also drilled the first development well at Horn Mountain, encountering more than 70 net feet of oil pay, and expects to bring it on line later this year. In addition, the Calpurnia exploration well encountered nearly 60 net feet of oil pay in Miocene-aged sands. Calpurnia is expected to be tied back to one of Anadarko's nearby operated facilities in the Green Canyon protraction area. Anadarko recently completed drilling operations at the Shenandoah-6 appraisal and sidetrack well, which did not encounter the oil-water contact in the eastern portion of the field. The company has currently suspended appraisal activity in the field while it evaluates the path forward.

Internationally, the company increased sales volume by approximately 17 percent year over year, driven by oil volumes from the TEN project offshore Ghana, which achieved first oil in August 2016. During the quarter, Anadarko also announced the Purple Angel discovery offshore Colombia, which is located approximately three miles from its previously announced Kronos discovery. Subsequent to quarter-end, the company made its third discovery offshore Colombia at the Gorgon prospect, which encountered 260-360 net feet of natural gas pay. The drillship in Colombia will be mobilized to West Africa in the second quarter to continue the company's exploration and appraisal program offshore Côte d'Ivoire.

OPERATIONS REPORT

For additional details on Anadarko's first-quarter 2017 operations and exploration program, please refer to the comprehensive Operations Report available at www.anadarko.com.

CONFERENCE CALL TOMORROW AT 8 A.M. CDT, 9 A.M. EDT

Anadarko will host a conference call on Wednesday, May 3, 2017, at 8 a.m. Central (9 a.m. Eastern) to discuss first-quarter results. The dial-in number is 877.883.0383 in the U.S. or 412.902.6506 internationally. The confirmation number is 3348513. 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

Ten pages of summary financial data follow, including current hedge positions, a reconciliation of "divestiture-adjusted" or "same-store" sales, 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 divestiture-adjusted volumes, which are intended to present performance of Anadarko's continuing asset base, giving effect to recent divestitures.

Logo - 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 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, including Anadarko's ability to successfully execute upon its capital program; to meet financial and operating guidance contained in this news release; to meet the long-term goals identified in this news release; to successfully drill, complete, test and produce the wells identified in this news release; and to timely complete and commercially operate the projects and drilling prospects identified in this news release. 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 U.S. 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. We may use terms in this presentation, such as "estimated net resources," and similar terms and quantities of "estimated proved reserves" using underlying management assumptions that the SEC's guidelines strictly prohibit us from including in filings with the SEC. These quantities may not constitute "reserves" within the meaning of the SEC's rules. Estimates and drilling locations have not been risked by our management. Actual quantities that may be ultimately recovered from our interests may differ substantially. Factors affecting ultimate recovery include the scope of our ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and our actual drilling results, including geological and mechanical factors affecting recovery rates. Such estimates may change significantly as development of our oil and gas assets provide additional data.

U.S. Investors are urged to consider closely the oil and gas disclosures in our Form 10-K for the year ended December 31, 2016, File No. 001-08968, available from us at www.anadarko.com or by writing to us at: Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380 Attn: Investor Relations. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

Anadarko Contacts

MEDIA:
John Christiansen, john.christiansen@anadarko.com, 832.636.8736
Stephanie Moreland, stephanie.moreland@anadarko.com, 832.636.2912

INVESTORS:
Robin Fielder, robin.fielder@anadarko.com, 832.636.1462
Jim Grant, james.grant@anadarko.com, 832.636.8320
Pete Zagrzecki, pete.zagrzecki@anadarko.com, 832.636.7727

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.

Management uses adjusted net income (loss) to evaluate operating and financial performance and believes the measure is useful to investors because it eliminates the impact of certain noncash and/or other items that management does not consider to be indicative of the Company's performance from period to period. Management also believes this non-GAAP measure is useful to investors to evaluate and compare the Company's operating and financial performance across periods, as well as facilitating comparisons to others in the Company's industry.



Quarter Ended March 31, 2017



Before


After


Per Share

millions except per-share amounts


Tax


Tax


(diluted)

Net income (loss) attributable to common (GAAP)




$

(318)



$

(0.58)


Adjustments for certain items affecting comparability







Total gains (losses) on derivatives, net, less net cash from settlement of commodity derivatives*


$

155



99



0.18


Gains (losses) on divestitures, net


804



509



0.92


Impairments







   Producing and general properties


(373)



(237)



(0.43)


   Exploration assets


(532)



(338)



(0.61)


Change in uncertain tax positions (FIN 48)




(21)



(0.04)


Certain items affecting comparability


$

54



12



0.02


Adjusted net income (loss) (Non-GAAP)




$

(330)



$

(0.60)



*    Includes $12 million related to interest-rate derivatives, $141 million related to commodity derivatives, and $2 million related to gathering, processing, and marketing sales.




Quarter Ended March 31, 2016



Before


After


Per Share

millions except per-share amounts


Tax


Tax


(diluted)

Net income (loss) attributable to common stockholders (GAAP)




$

(1,034)



$

(2.03)


Adjustments for certain items affecting comparability







Total gains (losses) on derivatives, net, less net cash from settlement of commodity derivatives*


$

(404)



(255)



(0.50)


Gains (losses) on divestitures, net


2



1




Impairments


(16)



(10)



(0.02)


Restructuring charges


(203)



(128)



(0.25)


Change in uncertain tax positions (FIN 48)




(73)



(0.14)


Certain items affecting comparability


$

(621)



(465)



(0.91)


Adjusted net income (loss) (Non-GAAP)




$

(569)



$

(1.12)



*    Includes $(325) million related to interest-rate derivatives, $(75) million related to commodity derivatives, and $(4) million related to gathering, processing, and marketing sales.

 

Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures

Management uses net debt to determine the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt in the capitalization ratio is useful to investors in determining the Company's leverage since the Company could choose to use its cash and cash equivalents to retire debt. In addition, management believes that presenting Anadarko's net debt excluding WGP is useful because WGP is a separate public company with its own capital structure.

 




March 31, 2017








Anadarko




Anadarko


WGP*


excluding

millions



Consolidated


Consolidated


WGP

Total debt (GAAP)



$

15,326



$

3,120



$

12,206


Less cash and cash equivalents



5,831



123



5,708


Net debt (Non-GAAP)



$

9,495



$

2,997



$

6,498

















Anadarko






Anadarko


excluding

millions





Consolidated


WGP

Net debt





$

9,495



$

6,498


Total equity





15,079



11,856


Adjusted capitalization





$

24,574



$

18,354












Net debt to adjusted capitalization ratio




39

%



35

%


*

Western Gas Equity Partners, LP (WGP) is a publicly traded consolidated subsidiary of Anadarko, and Western Gas Partners, LP (WES) is a consolidated subsidiary of WGP.

 

Anadarko Petroleum Corporation

Cash Flow Information

(Unaudited)



Quarter Ended


March 31,

millions

2017


2016

Cash Flows from Operating Activities




Net income (loss)

$

(275)



$

(998)


Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities




Depreciation, depletion, and amortization

1,115



1,149


Deferred income taxes

(660)



(413)


Dry hole expense and impairments of unproved properties

1,012



35


Impairments

373



16


(Gains) losses on divestitures, net

(804)



(2)


Total (gains) losses on derivatives, net

(147)



299


Operating portion of net cash received (paid) in settlement of derivative instruments

(8)



105


Other

83



115


Changes in assets and liabilities

434



(443)


Net Cash Provided by (Used in) Operating Activities*

$

1,123



$

(137)


Net Cash Provided by (Used in) Investing Activities

$

1,722



$

(973)


Net Cash Provided by (Used in) Financing Activities

$

(198)



$

3,119






Capital Expenditures**

$

1,255



$

896




*

Restructuring charges (excluding share-based compensation) were $180 million for the quarter ended March 31, 2016. Cash payments for restructuring charges were $19 million for the quarter ended March 31, 2017, and $79 million for the quarter ended March 31, 2016.



**

Includes Western Gas Partners, LP (WES) capital expenditures of $286 million for the quarter ended March 31, 2017, and $140 million for the quarter ended March 31, 2016.

 

Anadarko Petroleum Corporation

(Unaudited)



Quarter Ended

Summary Financial Information

March 31,

millions except per-share amounts

2017


2016

Consolidated Statements of Income




Revenues and Other




Oil sales

$

1,663



$

850


Natural-gas sales

502



366


Natural-gas liquids sales

289



178


Gathering, processing, and marketing sales

444



240


Gains (losses) on divestitures and other, net

869



40


Total

3,767



1,674


Costs and Expenses




Oil and gas operating

258



208


Oil and gas transportation

249



242


Exploration

1,085



126


Gathering, processing, and marketing

351



215


General and administrative

269



449


Depreciation, depletion, and amortization

1,115



1,149


Other taxes

155



117


Impairments

373



16


Other operating expense

22



16


Total

3,877



2,538


Operating Income (Loss)

(110)



(864)


Other (Income) Expense




Interest expense

223



220


(Gains) losses on derivatives, net

(147)



297


Other (income) expense, net

(8)




Total

68



517


Income (Loss) Before Income Taxes

(178)



(1,381)


Income tax expense (benefit)

97



(383)


Net Income (Loss)

(275)



(998)


Net income (loss) attributable to noncontrolling interests

43



36


Net Income (Loss) Attributable to Common Stockholders

$

(318)



$

(1,034)


Per Common Share




Net income (loss) attributable to common stockholders—basic

$

(0.58)



$

(2.03)


Net income (loss) attributable to common stockholders—diluted

$

(0.58)



$

(2.03)


Average Number of Common Shares Outstanding—Basic

551



509


Average Number of Common Shares Outstanding—Diluted

551



509






Exploration Expense




Dry hole expense

$

476



$

11


Impairments of unproved properties

537



24


Geological and geophysical expense

37



37


Exploration overhead and other

35



54


Total

$

1,085



$

126


 

Anadarko Petroleum Corporation

(Unaudited)





March 31,


December 31,

millions



2017


2016

Condensed Balance Sheets






Cash and cash equivalents



$

5,831



$

3,184


Accounts receivable, net of allowance



1,577



1,728


Other current assets



299



354


Net properties and equipment



29,065



32,168


Other assets



2,182



2,226


Goodwill and other intangible assets



5,739



5,904


Total Assets



$

44,693



$

45,564


Short-term debt



42



42


Other current liabilities



3,720



3,286


Long-term debt



15,284



15,281


Deferred income taxes



3,664



4,324


Asset retirement obligations



2,684



2,802


Other long-term liabilities



4,220



4,332


Common stock



57



57


Paid-in capital



11,914



11,875


Retained earnings



1,330



1,704


Treasury stock



(1,054)



(1,033)


Accumulated other comprehensive income (loss)



(391)



(391)


Total stockholders' equity



11,856



12,212


Noncontrolling interests



3,223



3,285


Total Equity



15,079



15,497


Total Liabilities and Equity



$

44,693



$

45,564


Capitalization






Total debt



$

15,326



$

15,323


Total equity



15,079



15,497


Total



$

30,405



$

30,820










Capitalization Ratios








Total debt




50

%



50

%

Total equity




50

%



50

%

 

Anadarko Petroleum Corporation

(Unaudited)


Sales Volumes and Prices



















Average Daily Sales Volumes


Sales Volumes


Average Sales Price


Oil


Natural Gas


NGLs


Oil


Natural Gas


NGLs


Oil


Natural Gas


NGLs


MBbls/d


MMcf/d


MBbls/d


MMBbls


Bcf


MMBbls


Per Bbl


Per Mcf


Per Bbl

Quarter Ended March 31, 2017


















United States

269



1,859



112



24



167



10



$

49.23



$

3.00



$

26.57


Algeria

70





6



6





1



53.20





37.57


Other International

28







3







53.77






Total

367



1,859



118



33



167



11



$

50.34



$

3.00



$

27.17




















Quarter Ended March 31, 2016


















United States

232



2,303



122



21



210



11



$

28.04



$

1.75



$

14.98


Algeria

65





6



6







34.62





22.78


Other International

18







2







32.27






Total

315



2,303



128



29



210



11



$

29.65



$

1.75



$

15.32







































Average Daily Sales Volumes
MBOE/d


Sales Volumes
MMBOE





























Quarter Ended March 31, 2017

795


72











Quarter Ended March 31, 2016

827


75





























 

Sales Revenue and Commodity Derivatives









Sales



Net Cash Received (Paid) from Settlement of Commodity Derivatives

millions

Oil


Natural Gas


NGLs



Oil


Natural Gas


NGLs

Quarter Ended March 31, 2017













United States

$

1,191



$

502



$

267




$

1



$

(4)



$

(3)


Algeria

334





22









Other International

138













Total

$

1,663



$

502



$

289




$

1



$

(4)



$

(3)















Quarter Ended March 31, 2016













United States

$

591



$

366



$

167




$

88



$

13



$

2


Algeria

206





11









Other International

53













Total

$

850



$

366



$

178




$

88



$

13



$

2


 

Anadarko Petroleum Corporation

Financial and Operating External Guidance

As of May 2, 2017






Note: Guidance excludes 2017 sales volumes associated with the Eagleford and Marcellus divestitures.








2nd-Qtr


Full-Year



Guidance (see Note)


Guidance (see Note)


 Units


 Units










Total Sales Volumes (MMBOE)


57



59



235



239


Total Sales Volumes (MBOE/d)


626



648



644



655











Oil (MBbl/d)


336



342



357



362











United States


248



252



273



276


Algeria


61



62



59



60


Ghana


27



28



25



26











Natural Gas (MMcf/d)


















United States


1,215



1,250



1,170



1,200











Natural Gas Liquids (MBbl/d)


















United States


89



93



91



94


Algeria


5



6



5



6






















$ / Unit


$ / Unit

Price Differentials vs NYMEX (w/o hedges)


















Oil ($/Bbl)


(4.20)



(0.20)



(4.30)



(0.30)











United States


(5.00)



(1.00)



(5.00)



(1.00)


Algeria


(2.00)



2.00



(2.00)



2.00


Ghana


(2.00)



2.00



(2.00)



2.00











Natural Gas ($/Mcf)


















United States


(0.50)



(0.30)



(0.40)



(0.20)











 

Anadarko Petroleum Corporation

Financial and Operating External Guidance

As of May 2, 2017






Note: Guidance excludes items affecting comparability.








2nd-Qtr


Full-Year



Guidance (see Note)


Guidance (see Note)



 $ MM


 $ MM

Other Revenues









Marketing and Gathering Margin


95



105



400



420


Minerals and Other


40



60



180



200






















$ / BOE


$ / BOE

Costs and Expenses









Oil & Gas Direct Operating


4.15



4.35



3.90



4.40


Oil & Gas Transportation


3.40



3.60



3.50



3.65


Depreciation, Depletion, and Amortization


18.15



18.40



17.70



17.80


Production Taxes (% of Product Revenue)


7.0

%


8.0

%


6.5

%


7.5

%












$ MM


$ MM










General and Administrative (excludes restructuring charges)


260



280



1,000



1,050


Other Operating Expense


5



10



30



40


Exploration Expense









   Non-Cash


95



125



885



985


   Cash


55



75



235



255


Interest Expense (net)


215



230



880



900


Other (Income) Expense


(5)



5



(15)













Taxes









Algeria  (100% Deferred for Q2 and 100% Current for Total Year)


60

%


70

%


60

%


70

%

Rest of Company ((10)% Current/110% Deferred for Q2 and (150)% Current/250% Deferred for Total Year)


25

%


35

%


25

%


35

%










Noncontrolling Interest


45



55



205



225




















Avg. Shares Outstanding (MM)









Basic


552



554



552



554


Diluted


552



554



553



555




















Capital Investment (Excluding Western Gas Partners, LP)

$ MM


$ MM










APC Capital Expenditures


1,050



1,250



4,500



4,700











 

Anadarko Petroleum Corporation

Commodity Hedge Positions

As of May 2, 2017
















Weighted Average Price per barrel




Volume
(MBbls/d)


Floor Sold


Floor Purchased


Ceiling Sold

Oil









Three-Way Collars








2017









WTI


68

$

40.00

$

50.00

$

58.84


Brent


23

$

40.00

$

50.00

$

62.64




91

$

40.00

$

50.00

$

59.80










Volume


Weighted Average Price per MMBtu




(thousand










MMBtu/d)


Floor Sold


Floor Purchased


Ceiling Sold

Natural Gas









Three-Way Collars








2017



682

$

2.00

$

2.75

$

3.60











2018



250

$

2.00

$

2.75

$

3.54











 







Interest-Rate Derivatives

As of May 2, 2017







Instrument

Notional Amt.

Reference Period

Mandatory
Termination Date

Rate Paid

Rate Received

Swap

$500 Million

Sept. 2016 – 2046

Sept. 2018

6.559%

3M LIBOR

Swap

$300 Million

Sept. 2016 – 2046

Sept. 2020

6.509%

3M LIBOR

Swap

$450 Million

Sept. 2017 – 2047

Sept. 2018

6.445%

3M LIBOR

Swap

$100 Million

Sept. 2017 – 2047

Sept. 2020

6.891%

3M LIBOR

Swap

$250 Million

Sept. 2017 – 2047

Sept. 2021

6.570%

3M LIBOR

 

Anadarko Petroleum Corporation

Reconciliation of Same-Store Sales


Average Daily Sales Volumes


Quarter Ended March 31, 2017


Quarter Ended March 31, 2016


Oil
MBbls/d


Natural Gas
MMcf/d


NGLs
MBbls/d


Total
MBOE/d


Oil

MBbls/d


Natural Gas
MMcf/d


NGLs
MBbls/d


Total
MBOE/d

U.S. Onshore

119



1,146



88



398



130



1,128



71



389


Deepwater Gulf of Mexico

125



129



12



159



58



85



7



79


International and Alaska

109





6



115



93





6



99


Same-Store Sales

353



1,275



106



672



281



1,213



84



567


Divestitures*

14



584



12



123



34



1,090



44



260


Total

367



1,859



118



795



315



2,303



128



827




















*

Includes East Chalk, Wamsutter, Ozona, Elm Grove, Hugoton, Hearne, Carthage, Eagleford, and Marcellus.

 

PDF - http://mma.prnewswire.com/media/507079/Anadarko_1Q17_OpsReport.pdf

 

SOURCE Anadarko Petroleum Corporation

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