Anadarko Reports Strong Second-quarter Earnings; Provides Guidance for Third-quarter, Full-year Results
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 |
|
|