-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SwvABVdjEq2/LNoSt/2Ts9u7CqnPPNW4fhWs9/c0edue9ZfsI7sx2EHZUIZZP5UW uJWlTTsQQeff5Qqbl6D30Q== 0000773910-96-000001.txt : 19960515 0000773910-96-000001.hdr.sgml : 19960515 ACCESSION NUMBER: 0000773910-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANADARKO PETROLEUM CORP CENTRAL INDEX KEY: 0000773910 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760146568 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08968 FILM NUMBER: 96562736 BUSINESS ADDRESS: STREET 1: 16855 NORTHCHASE DR CITY: HOUSTON STATE: TX ZIP: 77060 BUSINESS PHONE: 7138751101 MAIL ADDRESS: STREET 1: P O BOX 1330 STREET 2: P O BOX 1330 CITY: HOUSTON STATE: TX ZIP: 77251-1330 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended: March 31, 1996 Commission File Number: 1-8968 _____________________ ANADARKO PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) Delaware 76-0146568 (State of incorporation) (I.R.S. Employer Iden- tification No.) 17001 NORTHCHASE DRIVE, HOUSTON, TEXAS 77060 (Address of executive offices) (713) 875-1101 (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of each of the registrant's classes of common stock as of April 30, 1996 as shown below: Number of Shares Title of Class Outstanding Common Stock, $0.10 par value 59,154,516 (PAGE) PART I. FINANCIAL INFORMATION Item 1. Financial Statements ANADARKO PETROLEUM CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended March 31 thousands 1996 1995 Revenues Gas sales $ 89,115 $ 58,532 Oil and condensate sales 30,872 30,953 Natural gas liquids and other 15,720 13,342 Total 135,707 102,827 Cost and Expenses Operating expenses 26,533 27,454 Administrative and general 15,199 14,090 Depreciation, depletion and amortization 42,938 36,704 Other taxes 10,140 10,216 Total 94,810 88,464 Operating Income 40,897 14,363 Other Income and (Expenses) Other income 198 59 Interest expense (9,502) (8,012) Income before Income Taxes 31,593 6,410 Income Taxes 11,077 2,330 Net Income $ 20,516 $ 4,080 Per Common Share Net income $ 0.35 $ 0.07 Dividends $ 0.075 $ 0.075 Average Number of Shares Outstanding 59,054 58,878 See accompanying notes to consolidated financial statements. 2 (PAGE) Item 1. Financial Statements (continued) ANADARKO PETROLEUM CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) March 31, December 31, thousands 1996 1995 ASSETS Current Assets Cash and cash equivalents $ 13,390 $ 17,090 Accounts receivable 142,277 127,943 Inventories, at average cost 16,549 14,859 Prepaid expenses 1,939 3,306 Total 174,155 163,198 Properties and Equipment Original cost 3,784,771 3,717,672 Less accumulated depreciation, depletion and amortization 1,671,750 1,628,922 Net properties and equipment - based on the full cost method of accounting for oil and gas properties 2,113,021 2,088,750 Deferred Charges 7,902 15,099 $2,295,078 $2,267,047 See accompanying notes to consolidated financial statements. 3 (PAGE) Item 1. Financial Statements (continued) ANADARKO PETROLEUM CORPORATION CONSOLIDATED BALANCE SHEET (continued) (Unaudited) March 31, December 31, thousands 1996 1995 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable Trade and other $ 108,530 $ 153,502 Banks 14,315 12,849 Accrued expenses Interest 8,570 10,729 Taxes and other 10,133 13,393 Total 141,548 190,473 Long-term Debt 720,578 674,008 Deferred Credits Deferred income taxes 460,303 449,798 Other 44,686 43,074 Total 504,989 492,872 Stockholders' Equity Common stock, par value $0.10 (200,000,000 shares authorized, 60,065,594 and 60,016,045 shares issued as of March 31, 1996 and December 31, 1995, respectively) 6,052 6,047 Preferred stock, par value $1.00 (2,000,000 shares authorized, no shares issued as of March 31, 1996 and December 31, 1995) --- --- Paid-in capital 307,250 304,125 Retained earnings (as of March 31, 1996, $277,963,000 was not restricted as to the payment of dividends) 672,540 656,455 Deferred compensation (2,379) (2,808) Executive and directors benefit trust, at market value (1,000,000 shares as of March 31, 1996 and December 31, 1995) (55,500) (54,125) Total 927,963 909,694 $2,295,078 $2,267,047 See accompanying notes to consolidated financial statements. 4 (PAGE) Item 1. Financial Statements (continued) ANADARKO PETROLEUM CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Three Months Ended March 31 thousands 1996 1995 Cash Flow from Operating Activities Net income $20,516 $ 4,080 Adjustments to reconcile net income to net cash from operating activities: Depreciation, depletion and amortization 42,938 36,704 Amortization of restricted stock 429 387 Deferred income taxes 10,874 2,302 74,757 43,473 (Increase) decrease in accounts receivable (14,334) 26,666 Increase in inventories (1,690) (2,886) Decrease in accounts payable - trade and other (44,972) (5,641) Increase (decrease) in accrued expenses (5,419) 7,313 Other items - net 9,557 3,817 Net cash provided by operating activities 17,899 72,742 Cash Flow from Investing Activities Additions to properties and equipment (68,431) (83,854) Sales and retirements of properties and equipment 1,472 2,103 Net cash used in investing activities (66,959) (81,751) Cash Flow from Financing Activities Additions to debt 46,570 158,500 Retirements of debt --- (134,564) Increase (decrease) in accounts payable, banks 1,466 (5,047) Dividends paid (4,431) (4,417) Issuance of common stock 1,755 1,146 Issuance of treasury stock --- 240 Purchase of treasury stock --- (240) Net cash provided by financing activities 45,360 15,618 Net Increase (Decrease) in Cash and Cash Equivalents (3,700) 6,609 Cash and Cash Equivalents at Beginning of Period 17,090 6,530 Cash and Cash Equivalents at End of Period $13,390 $13,139 See accompanying notes to consolidated financial statements. 5 (PAGE) Item 1. Financial Statements (continued) ANADARKO PETROLEUM CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Accounting Policies Anadarko Petroleum Corporation is engaged in the exploration, development, production and marketing of gas, oil and natural gas liquids (NGLs). The terms "Anadarko" and "Company" refer to Anadarko Petroleum Corporation and its subsidiaries. The principal subsidiaries of Anadarko are Anadarko Gathering Company, Anadarko Trading Company and Anadarko Algeria Corporation. Certain amounts for prior years have been reclassified to conform to the current presentation. 2. Inventories Inventories are stated at the lower of average cost or market. NGLs and natural gas, when sold from inventory, are charged to expense using the average-cost method. The major classes of inventories are as follows: March 31, December 31, thousands 1996 1995 Materials and supplies $16,549 $13,969 Natural gas liquids, stored in inventory --- 412 Natural gas, stored in inventory --- 478 $16,549 $14,859 3. Properties and Equipment Oil and gas properties include costs of $250,818,000 and $245,577,000 at March 31, 1996 and December 31, 1995, respectively, which were excluded from capitalized costs being amortized. These amounts represent costs associated with unevaluated properties and major development projects. 4. Long-term Debt A summary of long-term debt follows: March 31, December 31, thousands 1996 1995 Notes Payable, Banks $182,700 $154,100 Commercial Paper 37,878 19,908 8 3/4% Notes due 1998 100,000 100,000 8 1/4% Notes due 2001 100,000 100,000 6 3/4% Notes due 2003 100,000 100,000 5 7/8% Notes due 2003 100,000 100,000 7 1/4% Debentures due 2025 100,000 100,000 $720,578 $674,008 The notes payable to banks and commercial paper have been classified as long- term debt in accordance with Statement of Financial Accounting Standards No. 6, "Classification of Short-term Obligations Expected to be Refinanced", under the terms of Anadarko's Bank Credit Agreements. 6 (PAGE) Item 1. Financial Statements (continued) ANADARKO PETROLEUM CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 5. Common Stock For the first quarter of 1996, dividends of seven and one-half cents per share were paid to holders of common stock. Under the most restrictive provisions of the various credit agreements, which limit the payment of dividends by the Company, retained earnings of $277,963,000 and $259,694,000 were not restricted as to the payment of dividends at March 31, 1996 and December 31, 1995, respectively. 6. Statement of Cash Flows Supplemental Information The amounts of cash paid for interest (net of amounts capitalized) and income taxes are as follows: Three Months Ended March 31 thousands 1996 1995 Interest $ 11,043 $7,063 Income taxes $ 2,532 $1,025 7. Operating Expenses Operating expenses by category are as follows: Three Months Ended March 31 thousands 1996 1995 Oil and gas $15,123 $15,821 Plant, gathering and marketing 7,470 8,644 Gas purchases 3,585 2,705 Other 355 284 $26,533 $27,454 8. The information, as furnished, reflects all normal recurring adjustments that are, in the opinion of management, necessary to a fair statement of financial position as of March 31, 1996 and December 31, 1995, the results of operations for the three months ended March 31, 1996 and 1995 and cash flows for the three months ended March 31, 1996 and 1995. 7 (PAGE) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview of Operating Results For the first quarter of 1996, Anadarko's net income was $20.5 million (35 cents per share) compared to net income of $4.1 million (seven cents per share) for the first quarter of 1995. Revenues for the first quarter of 1996 were $135.7 million compared to $102.8 million for the first quarter of 1995. The increase in net income and revenues is due primarily to higher prices for natural gas and crude oil and higher gas production volumes. The following table shows the Company's volumes and prices for the three months ended March 31, 1996 and 1995. Three Months Ended March 31 % Increase 1996 1995 (Decrease) Natural gas, million cubic feet 43,738 41,320 6 Price per thousand cubic feet $ 1.96 $ 1.30 51 Crude oil and condensate, thousand barrels 1,701 1,838 (7) Price per barrel $ 17.64 $ 16.48 7 Natural gas liquids, thousand barrels 988 1,014 (3) Price per gallon $ 0.34 $ 0.31 10 See "Natural Gas Volumes, Prices and Markets" and "Crude Oil, Condensate and Natural Gas Liquids Volumes and Prices". Costs and expenses during the first quarter of 1996 were $94.8 million, an increase of $6.3 million (seven percent) compared to $88.5 million for the first quarter of 1995. The increase is due primarily to higher depreciation, depletion and amortization (DD&A) expense related to the increase in production volumes of natural gas, higher DD&A rates, an increase in product sold from inventory and an increase in depreciation of general properties. Interest expense for the first quarter of 1996 was $9.5 million, an increase of 19 percent compared to $8.0 million for the first quarter of 1995. The increase was due primarily to increases in average outstanding borrowings and interest rates, and lower amounts of capitalized interest. Natural Gas Volumes, Prices and Markets During the first quarter of 1996, Anadarko produced 43.7 billion cubic feet (Bcf) or 480 million cubic feet per day (MMcf/d) of natural gas, up six percent compared to 41.3 Bcf or 459 MMcf/d of gas in the first quarter of 1995. In addition to sales of Anadarko gas, the Company, through its subsidiary, Anadarko Trading Company, marketed about 48 Bcf or 527 MMcf/d of third party gas during the first quarter of 1996 compared to 23 Bcf or 256 MMcf/d of third party gas during the same period of 1995. 8 (PAGE) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Anadarko's average gas price during the first quarter of 1996 was $1.96 per thousand cubic feet (Mcf), a 51 percent increase compared to $1.30 per Mcf in the first quarter of 1995. Crude Oil, Condensate and Natural Gas Liquids Volumes and Prices Anadarko's crude oil and condensate production for the first quarter of 1996 was 1.7 million barrels (MMBbls), or 19 thousand barrels per day (MBbls/d), compared to 1.8 MMBbls, or 20 MBbls/d, in the first quarter of 1995. The volume decline is due primarily to sales of producing properties in 1995. Anadarko's average oil price was $17.64 per barrel in the first quarter of 1996, an increase of seven percent compared to $16.48 per barrel in the same period in 1995. Generally, the Company's oil and condensate production is sold on a monthly basis as it is produced. Production of oil usually is not affected by volatility in market prices. Anadarko's natural gas liquids (NGLs) sales volumes were down three percent to 988 thousand barrels (MBbls) at an average price of 34 cents per gallon for the first quarter 1996. This compares to 1,014 MBbls at an average price of 31 cents per gallon for the same period of 1995. Use of Derivatives Anadarko uses derivative financial instruments to limit exposure to changes in the market price of natural gas and crude oil for the Company and to provide methods to fix the price for natural gas independently of the physical purchase or sale. Derivative instruments also provide methods to meet customer pricing requirements while achieving a price structure consistent with the Company's overall pricing strategy. While financial instruments are intended to reduce the Company's exposure to declines in the market price of natural gas and crude oil, the financial instruments may also limit Anadarko's gain from increases in the market price of natural gas and crude oil. As a result, gains and losses on financial instruments are generally offset by similar changes in the realized price of natural gas and crude oil. Gains and losses are recognized in revenues for the periods to which the financial instruments relate. Anadarko's financial instruments currently are comprised of futures, swaps and options. Capital Expenditures, Liquidity and Dividends During the first quarter of 1996, Anadarko's capital spending (including capitalized interest and overhead) was $68.4 million compared to $83.3 million in the first quarter of 1995. Capital expenditures in both periods related primarily to the Company's oil and gas exploration and development activities. The Company believes cash flows, including proceeds from divestitures, and existing available credit facilities will be sufficient to meet capital and operating requirements during 1996. However, Anadarko may pursue other financing options to reduce or stabilize interest costs. 9 (PAGE) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Anadarko's Board of Directors declared a quarterly dividend of seven and one- half cents per share of common stock outstanding. The dividend is payable on June 26, 1996 to stockholders of record on June 12, 1996. Under the most restrictive provisions of the various credit agreements, which limit the payment of dividends by the Company, retained earnings of $277,963,000 were not restricted as to the payment of dividends at March 31, 1996. The amount of future dividends for Anadarko will depend on earnings, financial condition, capital requirements and other factors, and will be determined by the Directors on a quarterly basis. Exploration and Development Activities During the first quarter of 1996, Anadarko participated in the drilling of a total of 61 wells, including 32 oil wells, 13 gas wells and 16 dry holes. This compares to a total of 81 wells in the first quarter of 1995, including 42 oil wells, 27 gas wells and 12 dry holes. International Algeria In February 1996, Anadarko and partners announced test results from the Hassi Berkine South (HBNS) No. 3 delineation well, drilled in Algeria's Sahara Desert. The well flowed 17,682 barrels of oil per day (BOPD) and 19.8 MMcf/d of gas, through a 90/64-inch choke with flowing tubing pressure of 1,341 pounds per square inch (psi). The well flowed 42 degree API gravity oil with no water, H2S or CO2. The HBNS No. 3 well is located about five miles southwest of the HBNS No. 1B discovery well. The HBNS No. 1B well flowed 16,000 BOPD and 17.8 MMcf/d of gas. In April 1996, Anadarko and partners completed the HBNS No. 4, a field delineation well that tested 14,504 BOPD and 18 MMcf/d of gas. The HBNS No. 4 is located about two miles northwest of the HBNS No. 1B discovery well. On behalf of Anadarko and partners, SONATRACH has applied to the Algeria Ministry of Energy for Provisional Exploitation Authorization (PEA) for Stage I production from wells in the HBN and HBNS Fields. Under the plans in the PEA application, Stage I production is expected to be about 40,000 BOPD (gross) beginning in 1997, based on Anadarko's best current estimates. The political unrest in Algeria has been the subject of numerous media reports. Although the Company was encouraged by democratic elections held in 1995, the Company is closely monitoring the situation and has taken reasonable and prudent steps to ensure the safety of employees working in the remote regions of the Sahara Desert. Anadarko is presently unable to predict with certainty any effect the current situation may have on activity planned for 1996 and beyond. However, the situation has not had any material effect on the Company's operations. 10 (PAGE) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Indonesia In January 1996, results from the North Geragai No. 3 well were announced. The well flowed 2,800 BOPD and 2.4 MMcf/d of gas. The North Geragai No. 4 well was successfully completed; however, it was not tested. Correlative pay in the No. 4 well was confirmed by log analysis. In the North Betara Field, the partners announced results from the No. 2 delineation well in April. The well flowed 12 MMcf/d of gas and 200 barrels of condensate per day (BCPD) through a one-inch choke. The gas content was approximately 55 percent CO2, consistent with the results from the No. 1 discovery well. Additional seismic studies and further delineation drilling will be conducted before commerciality can be determined. United States - Offshore Gulf of Mexico In January 1996, the East Cameron 157 #A-4 was successfully recompleted, with the well flowing 12.2 MMcf/d of gas and 900 BCPD through a 5/16-inch choke. Anadarko owns a 100-percent working interest in this Field. In March 1996, Anadarko and its partners announced their third subsalt discovery in the Gulf of Mexico's subsalt play. The Agate No. 1 well, located at Ship Shoal Block 361 tested from two separate zones in a single sand formation, with the well flowing 4,126 BOPD and 24 MMcf/d of gas. Located about six miles southwest of the Mahogany discovery, Agate is in about 400 feet of water. The close proximity of Agate to Mahogany creates some development advantages for this discovery. If the Agate discovery is proven commercial, the partners are considering producing Agate through the Mahogany platform, scheduled for installation in the third quarter of 1996. Phillips Petroleum Company (Phillips), the operator, and Anadarko each have a 50- percent working interest in the Agate discovery. Also in March 1996, Anadarko and partners announced the Alexandrite prospect, drilled at Ship Shoal 337, encountered no commercial hydrocarbons and was plugged and abandoned. The well was drilled to a total depth of 17,851 feet. Anadarko and Phillips, the operator, each own a 37.5-percent working interest in Alexandrite. Amoco Production Company (Amoco) owns a 25-percent working interest. In May 1996, Anadarko and partners announced successful results of the Mahogany #4 exploratory/appraisal well in the Mahogany subsalt field in the Gulf of Mexico. The well, located on Ship Shoal Block 359, encountered a gross pay interval of more than 180 feet between depths of 14,976 feet and 15,158 feet. The well, drilled to a total depth of 19,094 feet, was not tested. It will be temporarily abandoned and completed as a producing well after installation of the platform this summer. The productive zone encountered is the same zone tested in the 1993 discovery well, at rates of more than 7,200 BOPD and 7 MMcf/d of gas. The well did not reach the deepest exploratory targets due to drilling difficulties below the main field pay zone. 11 (PAGE) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Gulf of Mexico (continued) Anadarko and its partners will begin immediately drilling the next Mahogany appraisal well and continue drilling operations until the end of June 1996. At that time, the semi-submersible drilling rig will be moved off location to make way for installation of the Mahogany platform and associated oil and gas pipelines. After platform installation, the Company and its partners will complete all previously drilled wells and resume development drilling using a platform drilling rig. This is expected to substantially reduce drilling costs and increase drilling efficiency. First production from the field is scheduled for December 1996. Phillips is operator of the field and has a 37.5-percent working interest. Anadarko holds a 37.5-percent working interest and Amoco has a 25-percent working interest. Lease Sale On April 24, 1996, Anadarko was apparent high bidder on five of seven blocks at the Offshore Lease Sale #157 held in New Orleans, Louisiana. The sale was conducted by the Minerals Management Service for leases in the central Gulf of Mexico. If all leases are awarded, Anadarko's total expenditure will be $3.5 million (net) to the Company. United States - Onshore Southwest Kansas In Stevens County, Kansas, the Morris I #1H, a Hugoton infill development well, was completed flowing 930 thousand cubic feet per day (Mcf/d) of gas. Another infill development well, the Williams M #1-H, located in Morton County, Kansas, tested 1.0 MMcf/d of gas. The Company has a 100-percent working interest in both wells. From the Adamson Field, located in Seward County, Kansas, the Wettstein A #3-10 tested at 4 MMcf/d of gas and 6 BCPD. Anadarko owns a 100-percent working interest in this well. The Lambert "B" #1 produced 156 BOPD and 50 Mcf/d of gas in the Churchman Bible Field, located in Stevens County, Kansas. Anadarko owns an 80.9-percent working interest in this well. From the Eubank Field in Haskell County, Kansas, three wells were completed in the first quarter of 1996. The Ray C #2 flowed 80 BOPD and 2 MMcf/d of gas. The Owens "A" #4 produced 70 BOPD and 720 Mcf/d of gas. The southwestern College A #2 produced 210 BOPD. Anadarko owns a 100-percent working interest in all three wells. 12 (PAGE) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Golden Trend Oklahoma The Janovy "B" 1-33, located in the southwest Antioch Field, was completed, flowing 181 BOPD and 519 Mcf/d of gas. The well is located in Garvin County, Oklahoma and Anadarko owns a 100-percent working interest. Permian Basin West Texas The Ketchum Mountain Field, located in Irion County, Texas, is a primary area of focus for the Company's development drilling activities. In the first quarter of 1996, 11 wells were put on production in the Ketchum Mountain Field with combined production rates of 646 BOPD. Anadarko owns a 100-percent working interest in the wells. Acquisition of Gas Gathering Facility In March 1996, Anadarko closed on the second of two acquisitions announced in October 1994 from Panhandle Eastern Corporation (now PanEnergy Corp.). Combined, the acquisitions triple Anadarko's gathering capability to 480 MMcf/d. The Panhandle Eastern Pipe Line (PEPL) gathering assets serve primarily Seward, Stevens and Morton Counties, Kansas and Texas County, Oklahoma. The acquisition includes approximately 1,150 miles of pipeline and serves nearly 1,000 Anadarko-operated wells and 200 third-party wells. The purchase also includes 16 compressor stations and about 75,000 horsepower of compression. The new system currently moves more than 228 MMcf/d of gas, with about 75 percent coming from Anadarko-operated wells. In October 1994, Anadarko took over operation of the Cimarron River System (CRS). The CRS and PEPL gathering assets, along with Anadarko's existing Hugoton facilities, will be combined and operated as the Hugoton Gathering System (HGS). 13 (PAGE) Part II. OTHER INFORMATION Item 1. Legal Proceedings Heritage Resources, Inc. Litigation Pursuant to an order of the 162nd Judicial District Court for Dallas County, Texas, dated January 29, 1988, requiring all owners of interests in certain properties in Winkler County, Texas, to be joined as parties Plaintiff or parties Defendant, Anadarko has entered, as a party Plaintiff with certain other parties, a suit initially filed against Heritage Resources, Inc. (Heritage) by Tribal Drilling Company. The Plaintiffs, among other things, seek to have Heritage removed as operator of a well in which Plaintiffs own interests. The Defendants have asserted counterclaims against Anadarko and other Plaintiffs alleging that, among other things, the assertions of the Plaintiffs are frivolous and were made in bad faith and the Plaintiffs breached the joint operating agreements. In a companion case tried in Winkler County, Texas, to which Anadarko is not a party, a jury found in favor of certain of the defendants in the Dallas litigation and against some co-working interest owners and Plaintiffs involved in the Dallas litigation. The issues involved in this companion case were virtually identical to those pending in the Dallas County case. An appeal has been taken from the Winkler County judgment and oral arguments were heard at the El Paso Court of Appeals in November 1995. The judgment, even if the appeal is unsuccessful, is not binding on Anadarko because Anadarko was not a party to the Winkler County lawsuit. The trial is now scheduled to begin on June 10, 1996. While the outcome of the litigation cannot be predicted, Anadarko's management believes that any recovery on the counterclaims in a material amount is remote. 14 (PAGE) Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibits not incorporated by reference to a prior filing are designated by an asterisk (*) and are filed herewith; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated. Exhibit Original Filed File Number Description Exhibit Number 3(a) Restated Certificate of Incorporation 19(a)(i) to Form 10-Q 1-8968 of Anadarko Petroleum Corporation, for quarter ended dated August 28, 1986 September 30, 1986 (b) By-laws of Anadarko Petroleum 19(a)(ii) to Form 10-Q 1-8968 Corporation, as amended for quarter ended September 30, 1986 *10(a) Anadarko Petroleum Corporation 1993 Stock Incentive Plan Stock Option Agreement *10(b) Anadarko Petroleum Corporation 1993 Stock Incentive Plan Performance Share Agreement *27 Financial Data Schedule (b) Reports on Form 8-K There were no reports filed on Form 8-K for the three months ended March 31, 1996. 15 (PAGE) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer and principal financial officer. ANADARKO PETROLEUM CORPORATION (Registrant) May 13, 1996 [MICHAEL E. ROSE] Michael E. Rose - Senior Vice President, Finance and Chief Financial Officer EX-10.A 2 EXHIBIT 10(a) ANADARKO PETROLEUM CORPORATION 1993 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT THIS AGREEMENT, dated the 26th day of February, 1996, between Anadarko Petroleum Corporation, a Delaware corporation (the "Company") and Robert J. Allison, Jr. ("Optionee"). W I T N E S S E T H: 1. Pursuant to the provisions of the 1993 Stock Incentive Plan (the "Plan"), the Company hereby grants to the Optionee, subject to the terms and conditions of the Plan, and subject further to the terms and conditions herein set forth, the right and option ("Option") to purchase from the Company at the purchase price of $54.375 per share (said price being the fair market value of the $0.10 par value common stock of the Company ("Common Stock") at the date of grant of this Option) all or any part of an aggregate of 480,000 shares of Common Stock (hereinafter a "Non-Qualified Stock Option"). 2. Subject to earlier expiration of this Option as herein provided, the Non-Qualified Stock Option granted hereunder shall be exercisable at any time and from time to time after the date of grant hereof in accordance with the following schedule: Number of Date of Vesting Shares Vesting August 26, 1996 60,000 February 26, 1997 60,000 February 26, 1998 60,000 February 26, 1999 60,000 February 26, 2000 60,000 February 26, 2001 60,000 February 26, 2002 60,000 February 26, 2003 60,000 This Option shall not be exercisable in any event after the expiration of eleven (11) years from the date of grant hereof. 1 (PAGE) No partial exercise of any Option may be for fewer than ten (10) shares or the full number of shares as to which the Option is exercisable at the time of such partial exercise, if less than ten (10) shares. The Non-Qualified Stock Option may be exercised without regard to whether any Option previously granted to the Optionee has been exercised in whole or in part. 3. The Options may not be exercised unless the Optionee is at the time of such exercise in the employ of the Company and shall have been continuously employed by the Company, or a subsidiary of the Company, since the date of this Agreement; provided, however, that the Options shall be exercisable following the termination of the Optionee's employment during the term of the Options as follows: (i) Retirement or Disability. If the Optionee shall cease to be employed by the Company by reason of (a) retirement pursuant to a pension or retirement plan of the Company, or of a subsidiary of the Company, or (b) disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), the Optionee (or, in the event of Optionee's death, the Optionee's legal representative) may within a period of not more than thirty-six (36) months after such cessation of employment, exercise the Option if and to the extent it was exercisable on the date of such cessation. In no event may the Options be exercised more than eleven (11) years from the date of grant. (ii) Death of Optionee. In the event of the death of the Optionee while in the employ of the Company, the Optionee's legal representative or other person or persons to whom the Optionee's rights under the Option shall pass by the Optionee's will or the laws of descent and distribution may within a period of not more than twelve (12) months after the date of death, exercise the Option if and to the extent it was exercisable on the date of death. In no event may the Options be exercised more than eleven (11) years from the date of grant. 4. To the extent that the right to purchase shares has accrued hereunder, the Options, or any part thereof, may be exercised by giving written notice of exercise to the Corporate Secretary of the Company specifying the number of shares to be purchased and the method of purchase. If the Optionee elects to use Common Stock to exercise the Options, the fair market value of such Common Stock shall be the mean of the high and low prices of shares of Common Stock of the Company traded on the date of exercise, as reported on The New York Stock Exchange, Inc. Composite Transactions Reporting System. Date of exercise shall be deemed to be the date set forth on the notice of exercise. Such exercise shall be subject to payment 2 (PAGE) and such approval as may be required under policies and procedures established by the Committee designated by the Board of Directors of the Company to administer and interpret the Plan (the "Committee"). No shares shall be issued or delivered until full payment therefor has been made. 5. The Options granted hereunder are not transferable by the Optionee otherwise than by will or the laws of descent and distribution and are exercisable, during the Optionee's lifetime, only by the Optionee. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Options, or of any right or privilege conferred hereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the Options or any right or privilege conferred hereby, the Options and the right and privilege conferred hereby shall immediately become null and void. 6. The Company may at any time, in its sole discretion and with or without cause, cancel the Options, in whole or in part, to the extent they have not become exercisable at the time of such action. 7. The Optionee shall have no rights as a stockholder with respect to any shares of Common Stock subject to the Options prior to the date of issuance to the Optionee of a certificate or certificates for such shares. 8. By accepting the Options, the Optionee agrees for himself or herself and his or her legal representative that any and all shares of Common Stock purchased upon the exercise of either Option shall be acquired for investment and not with a view to, or for sale in connection with, any distribution thereof, and that each notice of the exercise of any portion of the Options shall be accompanied by a representation and agreement in writing signed by the Optionee or the Optionee's legal representative, as the case may be, to the foregoing effect and, to the effect that no sale of such shares of Common Stock shall be made other than in compliance with the registration provisions of the Securities Act of 1933 or pursuant to an exemption therefrom; provided, however, if at the time such notice of exercise is given the shares issuable upon exercise of the Options are registered under the Securities Act of 1933, the Optionee, if Optionee is an executive officer, director or owner, directly or indirectly, of five percent (5%) or more of the outstanding shares of Common Stock, or is (or may be deemed to be) an affiliate of the Company within the meaning of the rules and regulations under the Securities Act of 1933, shall, in lieu of the aforesaid representation and agreement, furnish an agreement in writing to the effect that he or she shall not offer or sell any of shares acquired as a result of such exercise unless the Company has registered such 3 (PAGE) shares for resale under the Securities Act of 1933, or such Optionee sells such shares pursuant to an exemption from the registration requirements of such Act. 9. The Optionee shall be considered to be in the employment of the Company as long as the Optionee remains an employee of either the Company, a parent or subsidiary corporation (as defined in section 425 of the Code) of the Company, or a corporation or a parent or subsidiary of such corporation assuming or substituting a new option for this Option. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined either by the Committee or the Board of Directors of the employing corporation, and its determination shall be final. Nothing herein contained shall confer upon the Optionee any right with respect to continuance of employment by the Company or interfere in any way with the right of the Company to terminate the Optionee's service, responsibilities, duties and authority to represent the Company or such subsidiary at any time, in its sole discretion and with or without cause. 10. If at any time the Company shall determine in its discretion that the listing or qualification of the shares of Common Stock subject hereto under any securities exchange requirements or under any applicable state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of the Options or the issue of shares hereunder, the Options may not be exercised in whole or in part unless such listing, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. 11. This Option may be adjusted or required to be surrendered pursuant to the provisions of Section 7 of the Plan. 12. Upon an exercise of this Option, the Company may be required to withhold federal and local tax with respect to the realization of compensation by the Optionee as a result of exercise of this Option. In the event the Optionee does not deliver to the Company Common Stock to satisfy any such withholding requirement, the Company is hereby authorized to satisfy any such withholding requirement out of (i) any cash or Common Stock distributable upon such exercise and (ii) any other cash compensation then or thereafter payable to the Optionee. To the extent that the Company in its sole discretion determines that such sources are or may be insufficient to fully satisfy such withholding requirement, the Optionee, as a condition to the exercise of this Option, shall deliver to the Company cash or Common Stock in an amount determined by the Company to be sufficient to satisfy any withholding requirement. 4 (PAGE) 13. Any notice to be given to the Company under this Agreement shall be addressed to the Corporate Secretary of the Company at 17001 Northchase Drive, Houston, Texas 77060, and any notice to be given to the Optionee under this Agreement shall be addressed to the Optionee at the address designated below in the space provided therefor; provided, however, that either party may substitute a different address by notice in writing to the other. Except as otherwise provided in this Agreement, any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope addressed as aforesaid and deposited, postage prepaid, in a post office or branch post office regularly maintained by the United States Government. 14. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors, but neither this Agreement nor any rights hereunder shall be assignable by the Optionee except as specifically provided for herein. 15. This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. ANADARKO PETROLEUM CORPORATION By Charles G. Manley Senior Vice President, Administration Robert J. Allison, Jr. 5 EX-10.B 3 EXHIBIT 10(b) ANADARKO PETROLEUM CORPORATION 1993 STOCK INCENTIVE PLAN PERFORMANCE SHARE AGREEMENT THIS AGREEMENT, dated the 26th day of February, 1996, between Anadarko Petroleum Corporation (the "Company") and Robert J. Allison, Jr. ("Employee"). W I T N E S S E T H: 1. Grant. Pursuant to the Company's 1993 Stock Incentive Plan (the "Plan"), the Company hereby grants to Employee, subject to the terms and conditions of the Plan, and subject further to the terms and conditions herein set forth, 100,000 shares of the $0.10 par value common stock of the Company ("Performance Shares"), to be issued as hereinafter provided in Employee's name upon the Company's achievement of pre-determined objectives for a specified performance period. In no event shall Employee be issued more than 150,000 Performance Shares pursuant to this Agreement. 2. Pre-determined Provisions. (a) Performance Period. The period beginning on January 1, 1996 and ending December 31, 1999 will be the initial performance period (the "4-Year Period"). The period beginning January 1, 1996 and ending December 31, 2003 will be the second performance period (the "8-Year Period"). (b) Peer Companies. The following companies are the peer companies ("Peer Companies") to be used in the award determination. Any Peer Company that ceases to be a publically traded entity on a recognized stock exchange during the 4-Year Period or 8-Year Period will be removed from the Peer Company list. No companies may be added to the list during the 4-Year Period or 8-Year Period. Apache Corporation Burlington Resource Inc. Enron Oil and Gas Company Louisiana Land and Exploration Company Noble Affiliates, Inc. Oryx Energy Company Sante Fe Energy Resources, Inc. Union Pacific Resources Group, Inc. Union Texas Petroleum Holdings, Inc. Vastar Resources, Inc. 1 (PAGE) (c) Performance Objectives. The number of Performance Shares to be issued to Employee will be determined at the end of each the 4-Year Period and the 8-Year Period by comparing the Company's annualized average quarterly total shareholder return ("TSR") over the 4-Year Period or the 8-Year Period, as the case may be, to each of the Peer Companies' annualized average quarterly TSR for the same period. TSR is calculated over the 4-Year Period by totaling the TSR's for each of the 16 fiscal quarters in the period and dividing by 4. TSR is calculated over the 8-Year Period by totaling the TSR's for each of the 32 fiscal quarters in the period and dividing by 8. Each quarter's TSR, expressed as a percentage, shall be calculated as follows: The closing stock price at the end of the fiscal quarter plus Dividends paid during the fiscal quarter divided by The closing stock price at the end of the previous fiscal quarter (d) Award Determination. At the end of each the 4-Year Period and 8-Year Period, the Peer Companies and the Company shall be ranked based on their TSR for the period from the highest TSR being number 1 to the lowest TSR being number 11. If the Company's TSR is in the first quartile of the ranked companies, Employee will be issued 150 percent of the Performance Shares. If the Company's TSR is in the second quartile of the ranked companies, Employee will be issued 100 percent of the Performance Shares. If the Company's TSR is below the second quartile of the ranked companies, Employee will not be issued any Performance Shares. In the event the calculation for determining the quartile ends in a fraction, the calculation will be "rounded" to include the next ranked company in the quartile (see Exhibit A). Performance Shares issued based on the 4-Year Period will be subtracted from any Performance Shares to be issued at the end of the 8-Year Period. In no event may Employee by issued more than an aggregate of 150,000 shares for the 4-Year Period and 8-Year Period combined. (e) Disability or Death. If Employee's employment with the Company is terminated as a result of (i)disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended or (ii)death of Employee, TSR shall be calculated for the Company and the Peer Companies using the closing stock price on the date employment ceases. The number of Performance Shares to be 2 (PAGE) issued to Employee shall be pro-rated for the actual number of calendar quarters completed plus a full quarter credit for the quarter in which the termination occurred. (f) Change of Control. Upon termination of employment of Employee as a result of any Change of Control as defined in the Plan, TSR shall be calculated for the Company and the Peer Companies using the closing stock price on the date of the Change of Control. The number of Performance Shares to be issued to Employee shall be pro-rated for the actual number of calendar quarters completed, plus a full quarter credit for the quarter in which the Change of Control occurred. 3. Tax Withholding. Employee may be required to pay to the Company, and the Company shall have the right and is hereby authorized to withhold from any payment made under this Agreement or from any other compensation or other amount owing to Employee, the amount (in cash, Performance Shares, other securities, other Awards or other property) of any applicable withholding taxes due in connection any Performance Shares granted hereunder and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. In the case of payments made hereunder in the form of Performance Shares, at the Committee's discretion Employee may be required to pay to the Company the amount of any taxes required to be withheld with respect to such Shares or, in lieu thereof, the Company shall have the right to retain (or Employee may be offered the opportunity to elect to tender in accordance with rules established by the Committee) the number of Performance Shares whose aggregate Fair Market Value equals the amount required to be withheld. 4. Limits on Transfer of Performance Shares. Unless otherwise determined by the Committee no Performance Shares may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Employee other than, in the case of Performance Shares which are not forfeited upon the death of Employee, by will or by laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company. 5. Ownership and Possession. Employee shall not have any rights as a stockholder with respect to any Performance Shares granted hereunder. 6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successor to the Company and all persons lawfully claiming under Employee. 3 (PAGE) 7. No Rights to continued Employment. Neither this Agreement nor the Plan shall be construed as giving Employee any right to continue in the employ of the Company or any of its Affiliates. 8. Governing Law. This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of Texas and applicable Federal law. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunder duly authorized, and Employee has executed this Agreement, all as of the date first above written. ANADARKO PETROLEUM CORPORATION By Charles G. Manley Senior Vice President, Administration Robert J. Allison, Jr. 4 (PAGE) EXHIBIT A No. of Companies Company Company (including APC) Ranking Ranking Top 25% 50-75% 11 (3) 1,2,3 (6) 4,5,6 10 (2.75) 1,2,3 (5.5) 4,5,6 9 (2.5) 1,2,3 (5) 4,5 8 (2.25) 1,2,3 (4.5) 4,5 7 (2) 1,2 (4) 3,4 6 (1.75) 1,2 (3.5) 3,4 5 (1.5) 1,2 (3) 3 4 (1.25) 1,2 (2.5) 3 EX-27 4
5 0000773910 ANADARKO PETROLEUM CORPORATION 1,000 3-MOS DEC-31-1996 MAR-31-1996 13,390 0 142,277 0 16,549 174,155 3,784,771 1,671,750 2,295,078 141,548 720,578 6,052 0 0 921,911 2,295,078 135,707 135,707 79,611 79,611 0 0 9,502 31,593 11,077 20,516 0 0 0 20,516 .35 0
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