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 News Releases - Anadarko


HOUSTON--(BUSINESS WIRE)--July 25, 2002--Anadarko Petroleum Corporation (NYSE:APC) today reported net income available to common stockholders of $239 million, or 93 cents per share (diluted) for the second quarter of 2002. For the second quarter of 2001, the company reported net income available to common stockholders of $401 million, or $1.50 per share (diluted).

In January 2002, Anadarko discontinued the amortization of goodwill in accordance with the Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets." Stated without amortization of goodwill, net income for the second quarter of 2001 would have been $420 million, or $1.57 per share (diluted).

"This quarter, Anadarko achieved volumes of 50 million barrels of oil equivalent and reported several nice discoveries, which puts us on track to deliver on our goal of 199 million BOE by year-end," said John Seitz, Anadarko president and chief executive officer.

"Our progress to date will help us build momentum to grow production by at least 5 percent in 2003," Seitz added. "We have a deep portfolio of attractive prospects ready to drill. A number of high-potential wells that we're planning should contribute to growth in production and reserves for many years to come."

Cash flow from operations totaled $561 million ($2.17 per share - diluted) in the second quarter of 2002, compared with $1.05 billion ($3.91 per share - diluted) in the same period in 2001.

Higher oil prices and volumes for the second quarter of 2002 partly offset lower natural gas prices and production compared to the same period in 2001. The company's combined natural gas, crude oil and natural gas liquids volumes for the second quarter totaled 50 million barrels of oil equivalent (BOE), or 546,000 barrels a day, compared with 52 million BOE, or 570,000 barrels a day, for the second quarter of 2001. Sales volumes were 50 million BOE, or 553,000 barrels a day, in the first quarter of 2002.

Natural gas production in the second quarter was 1.79 billion cubic feet (Bcf) per day, compared with 2.02 Bcf per day in the second quarter of 2001. Declines were seen mainly in Central Texas and the Gulf of Mexico. Natural gas prices in the second quarter were $2.94 per thousand cubic feet (Mcf), down from $4.49 per Mcf a year earlier.

These declines were partly offset by higher crude oil production and prices. Oil volumes increased by 13,000 barrels a day to 205,000 barrels a day, mainly due to the start-up of additional production capacity in Algeria. Second-quarter 2002 volumes were higher despite a net loss of about 12,000 barrels a day, due primarily to the sale of the company's operations in Guatemala, partly offset by the purchase of oil production in Qatar. Oil prices rose to $22.38 per barrel in the second quarter of 2002, versus $21.38 per barrel for the same period in 2001.

SECOND-QUARTER HIGHLIGHTS

  • In Canada, Anadarko made three new natural gas discoveries during the second quarter. In the Triassic formation in Northeast British Columbia, two discovery wells were tested at 6.5 million cubic feet (MMcf) per day and 6.1 MMcf per day respectively. These two wells, together with an offsetting development well completed during the quarter, were brought on production at a combined rate of 20 MMcf per day. Nine additional follow-up locations are planned. In the deep basin in Northwest Alberta, Anadarko completed two wells in the Saddle Hills area, one of which tested at a rate of 6.5 MMcf per day.

  • In North Louisiana, the company made a recent discovery at the Ansley prospect adjacent to the Vernon field. The Davis Brothers No. 11-1 well initially flowed to sales at 8 MMcf per day. The company is drilling three wells to confirm the discovery, as well as additional development drilling in the area. Anadarko holds 116,000 net acres in North Louisiana.

  • In East Texas, a new Bossier discovery at the Gregory A-1 well could have similar potential to the nearby Dew-Mimms area. The Gregory well initially flowed at a rate of 8 MMcf per day. Three stepout wells are planned at Gregory, as well as further development drilling. Anadarko has exploration rights for 23,000 net acres in the area surrounding the discovery.

  • In Algeria, Anadarko was awarded exploration rights over Block 403c/e in Algeria's third licensing round. Anadarko will hold a 67 percent interest. This increases Anadarko's gross acreage in the Berkine Basin by 400,000 acres to 4 million acres. The 100 millionth barrel of oil was produced through the Hassi Berkine central processing facility in May, and the company announced plans to drill three new exploration wells in Algeria in the second half of 2002.

  • In Qatar, Anadarko acquired BP's interest in Blocks 12 and 13, including the Al Rayyan oilfield, and took over operatorship. When a field expansion and redevelopment program is complete in early 2003, gross oil production from Al Rayyan is expected to nearly triple to 35,000 barrels a day.

  • In the Gulf of Mexico, the "I" platform at South Marsh Island Block 281 has been installed, and gas production from three discovery wells is expected to begin in early August 2002 at a rate of about 80 MMcf per day.

FINANCIAL DATA

Three pages of summary financial data follow.

EARNINGS GUIDANCE

Anadarko expects to earn about 60 cents per share (diluted) for the third quarter of 2002, with expected cash flow of about $1.85 per share (diluted). The forecasted lower earnings for the third quarter 2002, compared to the second quarter 2002, are primarily due to assumed 15 percent lower net realized prices for natural gas, as well as a return to a more normal net effective corporate income tax rate.

For the full year, the company expects earnings of about $2.90 per share (diluted) and cash flow of about $8 per share (diluted).

Price Assumptions

Anadarko's estimates assume average NYMEX oil prices of $26.50 per barrel for the third quarter and $25.70 per barrel for the full year, and NYMEX natural gas prices of $3.05 per Mcf both for the third quarter and for the year. To determine realized pricing estimates, Anadarko used NYMEX prices, plus or minus an expected price "differential" for each of the company's major producing areas, and any adjustment from hedge positions. Price data are shown on the attached financial table.

Anadarko has hedged approximately 10 percent of its natural gas production and an average of 35 percent of its oil production for the third and fourth quarters. The hedge positions are under both fixed-price and "collared" transactions, which use price ceilings and floors to help ensure sales prices within a determined range.

Volume Assumptions

Oil and gas sales volumes are expected to total 49 million BOE in the third quarter. Full-year 2002 sales volumes are expected to total 199 million BOE.

The attached financial tables detail other key assumptions behind Anadarko's estimates.

Anadarko Petroleum Corporation is one of the world's largest independent oil and gas exploration and production companies, with assets of $17 billion and reserves of 2.3 billion BOE. Houston-based Anadarko is active in the U.S., Canada, Algeria and Qatar and is executing a strategic exploration program in several other countries. More information is available at www.anadarko.com

EARNINGS CONFERENCE CALL

The Earnings and Modeling Conference Call is set for July 26 at 9:30 a.m. CDT (10:30 a.m. EDT). This call will include a discussion of detailed financial issues that support the company's projections of future-period earnings. More details are available at www.anadarko.com

ANADARKO OPERATIONS REPORT

For more details on Anadarko's operations, please refer to the comprehensive report on individual wells drilled during the second quarter. The report will be available on Friday, July 26, at www.anadarko.com on the Investor Relations page.

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 and Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that its goals will be achieved. See Additional Factors Affecting Business in the Management's Discussion and Analysis (MD&A) included in the company's 2001 Annual Report on Form 10-K.

                    Anadarko Petroleum Corporation

                                 Quarter Ended         Year to Date
Summary Financial Information(a)   June 30               June 30
                                ------------------  -----------------
$ and shares in millions        2002        2001       2002      2001
=====================================================================
Revenues
=====================================================================
Gas sales                        $480       $825       $833    $1,939
Oil and condensate sales          418        375        768       736
Natural gas liquids sales          55         71         97       144
Marketing sales                   770        950      1,377     2,408
Minerals and other                 15         17         36        20
---------------------------------------------------------------------
Total                           1,738      2,238      3,111     5,247
=====================================================================
Costs and Expenses
---------------------------------------------------------------------
Marketing purchases               752        931      1,348     2,364
Operating expenses                184        193        354       350
Administrative and
 general                           77         64        149       113
Depreciation, depletion
 and amortization                 274        320        541       594
Other taxes                        62         66        118       149
Impairments related to
 oil and gas properties            25          8         33        15
Amortization of goodwill           --         19         --        36
---------------------------------------------------------------------
Total                           1,374      1,601      2,543     3,621
=====================================================================
Operating Income                  364        637        568     1,626
=====================================================================
Other (Income) Expense
---------------------------------------------------------------------
Merger expenses                    --         17         --        27
Interest expense                   48         25         97        47
Other (income)
 expense                          (21)        (4)         2      (100)
---------------------------------------------------------------------
Total                              27         38         99       (26)
=====================================================================
Income before Income Taxes        337        599        469     1,652
=====================================================================
Income Taxes
=====================================================================
Income taxes                       96        228        139       617
Effect of change in
 Canadian income tax
 rate                              --        (31)        --       (31)
---------------------------------------------------------------------
Total                              96        197        139       586
=====================================================================
Net Income Before
 Cumulative Effect of
 Change in Accounting
 Principle                       $241       $402       $330    $1,066
=====================================================================
Preferred Stock Dividends           2          1          3         4
=====================================================================
Net Income Available
 to Common Stockholders
 Before Cumulative
 Effect of Change in
 Accounting Principle            $239       $401       $327    $1,062
=====================================================================
Cumulative Effect
 of Change in
 Accounting Principle              --         --         --         5
=====================================================================
Net Income
 Available to
 Common Stockholders             $239       $401       $327    $1,057
=====================================================================
Per Common Share
=====================================================================
Net income - before
 change in accounting
 principle - basic              $0.96      $1.60      $1.32     $4.24
Net income - before
 change in accounting
 principle - diluted            $0.93      $1.50      $1.27     $4.01
Change in accounting
 principle - basic                $--        $--        $--    $(0.02)
Change in accounting
 principle - diluted              $--        $--        $--    $(0.02)
Net income - basic              $0.96      $1.60      $1.32     $4.22
Net income - diluted            $0.93      $1.50      $1.27     $3.99
Dividends                      $0.075      $0.05      $0.15     $0.10
---------------------------------------------------------------------
Average Number of
 Shares Outstanding
 - Basic                          248        251        248       251
=====================================================================
Average Number of
 Shares Outstanding
 - Diluted                        259        268        261       266
=====================================================================

(a) Net income for 2001 reflects a change in accounting principle
    related to accounting for derivative instruments and hedging
    activities.

                    Anadarko Petroleum Corporation


Summary Financial            Quarter Ended           Year to Date
 Information(a)                June 30                 June 30
                         ---------------------    -------------------
$ and shares in millions   2002         2001        2002        2001
=====================================================================
Cash Flow from Operations
 before Changes in Assets
 and Liabilities
=====================================================================
Net income before
 cumulative effect
 of change in
 accounting principle       $241         $402        $330      $1,066
Depreciation,
 depletion and
 amortization                274          320         541         594
Amortization of
 goodwill                     --           19          --          36
Amortization of
 restricted stock              2           --           7          --
Non-cash merger
 expenses                     --            4          --           7
Interest expense
 - zero coupon
 debentures                    3            3           6           6
Deferred income taxes         44          206          53         415
Impairments related
  to oil and gas
  properties                  25            8          33          15
Other non-cash items         (28)          87         (10)         27
---------------------------------------------------------------------
Total                       $561       $1,049        $960      $2,166
=====================================================================
Capital Expenditures
=====================================================================
Capital spending            $453         $759      $1,185      $1,330
Capitalized interest          41           50          79         101
Capitalized overhead          57           47         100          83
---------------------------------------------------------------------
Total                       $551         $856      $1,364      $1,514
=====================================================================
Capitalization
=====================================================================
Total debt                                         $5,541      $4,689
Stockholders' equity                                6,690       7,821
---------------------------------------------------------------------
Total                                             $12,231     $12,510
=====================================================================
Capitalization Ratios
=====================================================================
Total debt                                             45%         37%
Stockholders' equity                                   55%         63%
---------------------------------------------------------------------
Total Assets                                      $17,511     $18,756
---------------------------------------------------------------------

(a) Net income for 2001 reflects a change in accounting principle
    related to accounting for derivative instruments and hedging
    activities.

                    Anadarko Petroleum Corporation

                                       Quarter Ended     Year to Date
Volumes and Prices                       June 30           June 30
                                      ---------------   --------------
                                       2002     2001     2002     2001
======================================================================
Natural Gas
======================================================================
United States
----------------------------------------------------------------------
Volumes, billion cubic
 feet                                   131      151      261      290
Average daily volumes,
 million cubic feet per day           1,435    1,651    1,446    1,600
Price per thousand cubic
 feet                                 $2.92    $4.43    $2.53    $5.60
----------------------------------------------------------------------
Canada
----------------------------------------------------------------------
Volumes, billion cubic
 feet                                    32       33       64       57
Average daily volumes,
 million cubic feet per day             356      362      352      316
Price per thousand cubic
 feet                                 $3.04    $4.82    $2.70    $5.53
----------------------------------------------------------------------
Other International
----------------------------------------------------------------------
Volumes, billion cubic
 feet                                  --       --       --          1
Average daily volumes,
 million cubic feet per
 day                                   --          5     --          5
Price per thousand cubic
 feet                                $ --      $1.24   $ --      $1.13
----------------------------------------------------------------------
Total
----------------------------------------------------------------------
Volumes, billion cubic
 feet                                   163      184      325      348
Average daily volumes,
 million cubic feet per day           1,791    2,018    1,798    1,921
Price per thousand cubic
 feet                                 $2.94    $4.49    $2.56    $5.58
----------------------------------------------------------------------
Crude Oil and Condensate
----------------------------------------------------------------------
United States
----------------------------------------------------------------------
Volumes, million barrels                  8        9       16       16
Average daily volumes,
 thousand barrels per day                85       96       88       92
Price per barrel                     $23.25   $24.61   $21.07   $25.00
----------------------------------------------------------------------
Canada
----------------------------------------------------------------------
Volumes, million barrels                  3        3        7        6
Average daily volumes,
 thousand barrels per day                37       36       37       34
Price per barrel                     $19.22   $18.84   $17.55   $17.79
----------------------------------------------------------------------
Algeria
----------------------------------------------------------------------
Volumes, million barrels                  6        2       11        4
Average daily volumes,
 thousand barrels per day                61       17       60       21
Price per barrel                     $23.49   $25.58   $21.84   $25.30
----------------------------------------------------------------------
Other International
----------------------------------------------------------------------
Volumes, million barrels                  2        4        4        8
Average daily volumes,
 thousand barrels per day                22       43       23       42
Price per barrel                     $21.21   $14.68   $18.19   $14.77
----------------------------------------------------------------------
Total
----------------------------------------------------------------------
Volumes, million barrels                 19       18       38       34
Average daily volumes,
 thousand barrels per day               205      192      208      189
Price per barrel                     $22.38   $21.38   $20.35   $21.48
----------------------------------------------------------------------
Natural Gas Liquids
----------------------------------------------------------------------
Total
----------------------------------------------------------------------
Volumes, million barrels                  4        4        7        7
Average daily volumes,
 thousand barrels per day                42       42       41       39
Price per barrel                     $14.34   $18.81   $13.02   $20.52
======================================================================
Total Barrels of Oil
 Equivalent (BOE)
----------------------------------------------------------------------
Volumes, million BOE                     50       52       99       99
Average daily volumes,
 thousand BOE per day                   546      570      549      548
----------------------------------------------------------------------

                    Anadarko Petroleum Corporation
                          Third Quarter 2002
                      Financial Model - Guidance
                          As of July 25, 2002

                2nd Quarter         3rd Quarter         Total Year
                   Actual             Forecast           Forecast
             -----------------  ------------------  ------------------

                          $ /                 $ /                 $ /
                $ MM     Share      $ MM     Share      $ MM     Share
             ---------  ------   ---------  ------   ---------  ------
Net Income        $239   $0.93        $152   $0.60        $740   $2.90
Cash Flow
 from
 Operations       $561   $2.17        $481   $1.85      $2,062   $8.00

----------------------------------------------------------------------

Price Deck (NYMEX)     ($/Unit)            ($/Unit)            ($/Unit)
 Crude Oil
  ($/Bbl)               $26.24              $26.50              $25.70
 Natural Gas
  ($/Mcf)                $3.40               $3.05               $3.05
 Natural Gas
  Liquids (%
  of NYMEX
  Oil Price)               55%                 50%                 53%

----------------------------------------------------------------------

                         Price               Price              Price
                        Differ-             Differ-             Differ-
                        ential              ential              ential
              Volumes    ($ /     Volumes    ($ /     Volumes    ($ /
                         Unit)               Unit)               Unit)
             ---------  ------   ---------  ------   ---------  ------
Total Sales
 (MMBoe)            50                  49                 199

Crude Oil
 (MBbl/d):         205  $(3.86)        203  $(3.33)        207  $(3.55)
 United States      85  $(2.99)         79  $(3.00)         84  $(3.03)
 Canada             37  $(7.02)         37  $(6.15)         37  $(6.82)
 Algeria            61  $(2.75)         65  $(1.60)         65  $(1.74)
 Other
  Inter-
  national          22  $(5.03)         23  $(4.85)         22  $(5.44)

Natural Gas
 (MMcf/d):       1,791  $(0.45)      1,727  $(0.55)      1,775  $(0.36)
 United States   1,435  $(0.48)      1,368  $(0.50)      1,414  $(0.35)
 Canada            356  $(0.36)        358  $(0.75)        361  $(0.40)

Natural Gas
 Liquids
 (MBbl/d):          42                  40                  41
 United States      40                  38                  39
 Canada              2                   2                   2

----------------------------------------------------------------------

                $ MM                $ MM                $ MM
              --------           ---------           ---------
Other Revenues:
 Marketing
  Margin
  (Sales -
  Costs)           $18                 $17                 $70
 Minerals
  and Other        $15                 $17                 $71

                $ MM    $ / Boe     $ MM    $ / Boe     $ MM   $ / Boe
             ---------  -------  ---------  -------  ---------  ------
Costs and
 Expenses:
 Operating
  Costs           $184   $3.71        $181   $3.70        $725   $3.65
 Admini-
  strative
  and General      $77                 $73                $295
 Depreciation,
  Depletion
  and Amor-
  tization        $274   $5.51        $274   $5.60      $1,094   $5.51
 Impairments
  of Oil and
  Gas Assets       $25                $ --                 $33
 Goodwill
 Production
  and Other
  Taxes (%
  of Rev)          $62    6.4%                7.6%                7.0%

----------------------------------------------------------------------

                $ MM                $ MM                $ MM
             ---------           ---------           ---------
Other Items:
 Interest
  Expense          $48                 $49                $196
 Other
  (Income)
  Expense         $(21)                $18                 $34

----------------------------------------------------------------------

Federal Tax
 Rate                      29%                 39%                 34%
 Deferred
  Taxes (% of
  Total Taxes)             46%                 54%                 49%

----------------------------------------------------------------------

Average Shares
 Outstanding
 (MM)
 Basic                     248                 249                 249
 Fully Diluted             259                 259                 259

----------------------------------------------------------------------

                $ MM                                    $ MM
             ---------                               ---------
Capital
 Investment
 Program          $551                                  $2,200
 Capital
  Budget
  (Estimated)     $453                                  $1,838
 Capitalized
  Direct
  Expenses         $57                                    $198
 Capitalized
  Interest         $41                                    $164

                    Anadarko Petroleum Corporation
                            Hedge Position
                          As of July 25, 2002

                       Fixed and
                       Physical
                       Contracts            Collars             Total
                    --------------  -------------------------  -------
                            NYMEX               NYMEX Price
                    Volume  Price   Volume    Floor   Ceiling  Volume
                    ------  ------  ------    ---------------  -------
Crude Oil           Bbl/d   $/Bbl    Bbl/d    $/Bbl   $/Bbl    Bbl/d
---------           ------  ------  ------    ------  ------   -------
United States
 3rd Quarter 2002   16,600  $26.77  34,600    $23.41   $28.13   51,200
 4th Quarter 2002   25,000  $26.77  43,000    $23.72   $28.14   68,000
 Average            20,800  $26.77  38,800    $23.59   $28.14   59,600

 Total Year 2003      --     $--    10,000    $21.00   $26.33   10,000

Canada
 3rd Quarter 2002    3,000  $24.32  10,000    $22.50   $24.61   13,000
 4th Quarter 2002    3,000  $24.32  10,000    $22.50   $24.61   13,000
 Average             3,000  $24.32  10,000    $22.50   $24.61   13,000

 Total Year 2003     1,000  $23.80   7,000    $22.59   $25.16    8,000

Total
 3rd Quarter 2002   19,600  $26.40  44,600    $23.21   $27.34   64,200
 4th Quarter 2002   28,000  $26.51  53,000    $23.49   $27.48   81,000
 Average            23,800  $26.46  48,800    $23.36   $27.41   72,600

 Total Year 2003     1,000  $23.80  17,000    $21.65  $25.85    18,000

Natural Gas         MMcf/d  $/Mcf    MMcf/d    $/Mcf   $/Mcf   MMcf/d
-----------         ------  -----    ------    -----   -----   ------

United States
 3rd Quarter 2002     --     $--     125.0     $3.60    $4.33    125.0
 4th Quarter 2002     --     $--     125.0     $3.60    $4.33    125.0
 Average              --     $--     125.0     $3.60    $4.33    125.0

 2003                 --     $--      25.0     $3.00    $4.87     25.0

Canada
 3rd Quarter 2002     39.9   $3.43     9.5     $1.66    $4.23     49.4
 4th Quarter 2002     58.7   $3.48     3.2     $1.66    $4.23     61.9
 Average              49.3   $3.46     6.4     $1.66    $4.23     55.7

 2003                 67.5   $3.34     --       $--      $--      67.5

Total
 3rd Quarter 2002     39.9   $3.43   134.5     $3.46    $4.32    174.4
 4th Quarter 2002     58.7   $3.48   128.2     $3.55    $4.32    186.9
 Average              49.3   $3.46   131.4     $3.51    $4.32    180.7

 2003                 67.5   $3.34    25.0     $3.00    $4.87     92.5

CONTACT: Anadarko Petroleum, Houston
Media Contacts:
Anne Vincent, 832/636-8368
anne_vincent@anadarko.com
or
Teresa Wong, 832/636-1203
teresa_wong@anadarko.com
or
Lee Warren, 832/636-3321
lee_warren@anadarko.com
or
Investor Contacts:
Paul Taylor, 832/636-3471
paul_taylor@anadarko.com
or
David Larson, 832/636-3265
david_larson@anadarko.com
or
Stewart Lawrence, 832/636-3326
stewart_lawrence@anadarko.com






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