EX-99 2 a6275035ex99.htm EXHIBIT 99

Exhibit 99

Anadarko Announces First-Quarter Results

HOUSTON--(BUSINESS WIRE)--May 3, 2010--Anadarko Petroleum Corporation (NYSE: APC) today announced first-quarter 2010 net income attributable to common stockholders of $716 million, or $1.43 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items increased net income by approximately $304 million, or $0.62 per share (diluted) on an after-tax basis.(1) Cash flow from operating activities in the first quarter of 2010 was $1.317 billion, and discretionary cash flow totaled $1.530 billion.(2)

FIRST-QUARTER 2010 HIGHLIGHTS

  • Achieved record quarterly sales volumes
  • Reduced lease operating expenses per unit by 32 percent vs. first-quarter 2009
  • Drilled three successful deepwater appraisal wells
  • Announced the first discovery in a frontier basin offshore Mozambique
  • Closed $1.5 billion joint-venture agreement in the Marcellus Shale

“During the first quarter of 2010, we continued to build upon the success of 2009 and again delivered significant growth,” said Jim Hackett, Anadarko Chairman and CEO. “In the first quarter of this year, our reported sales volumes increased by about 15 percent relative to the first quarter of 2009, and we’ve further improved our cost-control efforts and the strength of our balance sheet. With the strong and consistent performance of our producing properties, we are raising our full-year sales volumes guidance to a range of 230 million to 234 million BOE (barrels of oil equivalent) – equivalent to an increase of 3.5 million BOE in the estimated midpoint.”

Anadarko’s deepwater drilling program also delivered strong results with three successful appraisal wells – offshore Ghana at Tweneboa and in the deepwater Gulf of Mexico at Lucius and Vito. The company plans to continue delineation activities this year on each of these emerging mega projects. In addition, Anadarko made a new discovery offshore Mozambique at the Windjammer prospect. This was the first deepwater well in the Rovuma Basin, and encountered more than 555 net feet of natural gas pay, proving the presence of an active hydrocarbon system in the basin and validating the prospectivity of Anadarko’s large acreage position.

First-quarter 2010 sales volumes of natural gas, crude oil and natural gas liquids totaled 62 million BOE, or 686,000 BOE per day. Reported sales volumes for the quarter included approximately 1.9 million BOE from a royalty price threshold adjustment related to the company’s 2009 Gulf of Mexico natural gas sales. First-quarter 2010 natural gas sales volumes averaged approximately 2.4 billion cubic feet per day. Oil sales volumes in the first quarter averaged 222,000 barrels per day and natural gas liquids sales volumes averaged 65,000 barrels per day.

OPERATIONS UPDATE

During the first quarter of 2010, Anadarko closed the previously announced $1.5 billion joint-venture agreement with Mitsui E&P USA LLC, an affiliate of Mitsui & Co., Ltd., whereby Mitsui will earn a 32.5-percent interest in Anadarko’s Marcellus Shale assets by funding nearly all of Anadarko’s development costs through 2013. Anadarko also acquired more than 80,000 net acres in the liquids-rich portion of the Eagleford Shale in the Maverick Basin from TXCO for approximately $93 million and increased its working interest in all of its Eagleford properties to 75 percent. Additionally, the company further strengthened its balance sheet by refinancing a portion of its near-term debt maturities.

Anadarko continues to advance its three sanctioned mega projects, Jubilee, Caesar/Tonga and El Merk, toward first production on time and on budget. Installation of subsea infrastructure and equipment is under way at the Jubilee field offshore Ghana. The sail-away of the FPSO (floating production, storage and offloading) vessel, from Singapore to Ghana, is scheduled for later this month, with first production from the Jubilee field on schedule for the end of this year.

In early April, Anadarko announced the successful pre-salt drillstem test at the Wahoo#1 well offshore Brazil. The company believes the well will be capable of producing at a sustained rate in excess of 15,000 barrels of high-quality oil per day. Anadarko has moved the drillship to the Wahoo#2 well to conduct its second drillstem test in the field, before mobilizing the rig to drill the Wahoo South exploration well later this quarter.

About two weeks ago, in the Gulf of Mexico, the BP-operated Macondo exploration well on Mississippi Canyon block 252 discovered an oil accumulation. As reported in the press, an explosion and fire occurred on the Deepwater Horizon drilling rig during operations. The rig subsequently sank, hydrocarbons were released into the Gulf and a large-scale well-control and clean-up effort has ensued. Anadarko is a 25-percent working interest owner in this block, which is operated by BP Exploration & Production, Inc. A full response and investigation is being conducted by the operator of the well, the drilling rig owner and governmental entities. The company maintains insurance policies designed to provide financial protection for such events, for its share of gross covered costs up to an aggregate level of approximately $710 million, less deductibles. Based on its 25-percent non-operated interest, the company estimates its net insurance coverage will likely total approximately $177.5 million, less deductibles of $15 million.

CONFERENCE CALL TOMORROW AT 9 A.M. CDT, 10 A.M. EDT

Anadarko will host a conference call on Tuesday, May 4, at 9 a.m. Central Daylight Time (10 a.m. Eastern Daylight Time) to discuss first-quarter results, current operations and the company’s outlook for the remainder of 2010. The dial-in number is 888.713.4218 in the United States or 617.213.4870 internationally. The confirmation number is 14797442. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast and slide presentation, please visit www.anadarko.com. A replay of the call will also be available on the Web site for approximately 30 days following the conference call.

ANADARKO OPERATIONS REPORT

For more details on Anadarko’s operations, please refer to the comprehensive report on first-quarter activity. The report will be available at www.anadarko.com on the Investor Relations page.

FINANCIAL DATA

Nine pages of summary financial data follow, including current hedge positions, financial guidance and supplemental production guidance.

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko, please visit www.anadarko.com.

(1) See the accompanying table for details of certain items affecting comparability.

(2) See the accompanying table for a reconciliation of GAAP to non-GAAP financial measures and a statement indicating why management believes the non-GAAP financial measures provide useful information for investors.

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 such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including the outcome of events in the Gulf of Mexico relating to the Macondo well, the company’s ability to achieve its production targets, successfully manage its capital expenditures, and successfully drill, complete, test and produce the wells and prospects identified in this news release. See “Risk Factors” in the company’s 2009 Annual Report on Form 10-K and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.

Anadarko Petroleum Corporation
     
Certain Items Affecting Comparability
 
Quarter Ended March 31, 2010
Before After Per Share
millions except per-share amounts   Tax   Tax   (diluted)
Unrealized gains (losses) on derivatives, net* $ 545 $ 348 0.71
Loss on early retirements of debt (40 ) (25 ) (0.05 )
Gains (losses) on divestitures and other, net (13 ) (7 ) (0.01 )
Impairments (12 ) (8 ) (0.02 )
Change in uncertain tax positions (FIN48)     -       (4 )     (0.01 )
    $ 480     $ 304     $ 0.62  
 
*For the quarter ended March 31, 2010, before-tax unrealized gains (losses) on derivatives, net includes $567 million related to commodity derivatives, $(29) million related to other derivatives, and $7 million related to gathering, processing and marketing sales.
 
Quarter Ended March 31, 2009
Before After Per Share
millions except per-share amounts   Tax   Tax   (diluted)
Unrealized gains (losses) on derivatives, net* $ (240 ) $ (153 ) (0.33 )
Gains (losses) on divestitures, net 10 8 0.02
Impairments (51 ) (33 ) (0.07 )
Change in uncertain tax positions (FIN48)     -       82       0.18  
    $ (281 )   $ (96 )   $ (0.20 )
 
*For the quarter ended March 31, 2009, before-tax unrealized gains (losses) on derivatives, net includes $(324) million related to commodity derivatives, $113 million related to other derivatives, and $(29) million related to gathering, processing and marketing sales.
 
Reconciliation of GAAP to Non-GAAP Measures
 
Below are reconciliations of cash provided by operating activities (GAAP) to discretionary cash flow and free cash flow (non-GAAP), and net income (GAAP) to adjusted net income (non-GAAP) as required under Regulation G of the Securities Exchange Act of 1934. The company uses discretionary cash flow and free cash flow to demonstrate the company's ability to internally fund capital expenditures and to service or incur additional debt. It is useful in comparisons of oil and gas exploration and production companies because it excludes fluctuations in assets and liabilities. The company uses adjusted net income to evaluate the company’s operational trends and performance.
 
Quarter Ended
March 31,
millions       2010   2009
Net cash provided by operating activities $ 1,317 $ 533
Add back:
Change in accounts receivable 27 (256 )
Change in accounts payable and accrued expenses 281 589
Change in other items - net         (95 )     (134 )
Discretionary cash flow from operations       $ 1,530     $ 732  

 

Anadarko Petroleum Corporation
       
Reconciliation of GAAP to Non-GAAP Measures
 
Quarter Ended
March 31,
millions             2010       2009  
Discretionary cash flow from operations $ 1,530 $ 732
Less: Capital expenditures             1,239       1,107  
Free cash flow           $ 291     $ (375 )
 
 
Quarter Ended Quarter Ended
March 31, 2010 March 31, 2009
After Per Share After Per Share
millions except per-share amounts   Tax   (diluted)   Tax   (diluted)
Net income (loss) attributable to common stockholders $ 716 1.43 $ (338 ) (0.73 )
Less: Certain items affecting comparability     304     0.62     (96 )     (0.20 )
Adjusted net income (loss)   $ 412   $ 0.81   $ (242 )   $ (0.53 )
 
Presented below is a reconciliation of total debt (GAAP) to net debt (non-GAAP). Management uses net debt as a measure of the Company's outstanding debt obligations relative to its cash and cash equivalents on hand.
 
March 31,
millions               2010
Total debt $ 12,937
Less: Cash and cash equivalents                 3,692  
Net debt               $ 9,245  
Anadarko Petroleum Corporation
(Unaudited)
   
Quarter Ended
Summary Financial Information March 31,
millions except per-share amounts   2010   2009
Consolidated Statements of Income        
Revenues and Other        
Gas sales $ 1,081 $ 871
Oil and condensate sales 1,502 636
Natural-gas liquids sales 274 83
Gathering, processing and marketing sales 273 161
Gains (losses) on divestitures and other, net     9       45  
Total     3,139       1,796  
Costs and Expenses        
Oil and gas operating 187 241
Oil and gas transportation and other 191 174
Exploration 155 301
Gathering, processing and marketing 183 135
General and administrative 210 209
Depreciation, depletion and amortization 981 806
Other taxes 301 150
Impairments     12       51  
Total     2,220       2,067  
Operating Income (Loss)     919       (271 )
Other (Income) Expense        
Interest expense 224 182
(Gains) losses on commodity derivatives, net (588 ) 201
(Gains) losses on other derivatives, net 29 (98 )
Other (income) expense, net     9       (11 )
Total     (326 )     274  
Income (Loss) Before Income Taxes     1,245       (545 )
Income Tax Expense (Benefit)     517       (214 )
Net Income (Loss)   $ 728     $ (331 )
Net Income Attributable to Noncontrolling Interests     12       7  
Net Income (Loss) Attributable to Common Stockholders   $ 716     $ (338 )
Per Common Share:        
Net income (loss) attributable to common stockholders - basic $ 1.44 $ (0.73 )
Net income (loss) attributable to common stockholders - diluted   $ 1.43     $ (0.73 )
Average Number of Common Shares Outstanding - Basic     493       460  
Average Number of Common Shares Outstanding - Diluted     496       460  
 
         
Exploration Expense        
Dry hole expense $ 25 $ 121
Impairments of unproved properties 88 107
Geological and geophysical expense 3 34
Exploration overhead and other     39       39  
Total   $ 155     $ 301  
Anadarko Petroleum Corporation
(Unaudited)
   
Quarter Ended
Summary Financial Information March 31,
millions   2010   2009
Cash Flow from Operating Activities        
Net income (loss) $ 728 $ (331 )
Depreciation, depletion and amortization 981 806
Deferred income taxes 154 (299 )
Dry hole expense and impairments of unproved properties 113 228
Impairments 12 51
(Gains) losses on divestitures, net (13 ) (10 )
Unrealized (gains) losses on derivatives (545 ) 240
Other noncash items     100       47  
Discretionary Cash Flow from Operations 1,530 732
(Increase) decrease in accounts receivable (27 ) 256
Increase (decrease) in accounts payable and accrued expenses (281 ) (589 )
Other items - net     95       134  
Net cash provided by operating activities   $ 1,317     $ 533  
 
         
Capital Expenditures   $ 1,239     $ 1,107  
 
 
March 31, December 31,
    2010   2009
Condensed Balance Sheets        
Cash and cash equivalents $ 3,692 $ 3,531
Other current assets 2,710 2,552
Net properties and equipment 37,353 37,204
Other assets 1,640 1,514
Goodwill and other intangible assets     5,313       5,322  
Total Assets   $ 50,708     $ 50,123  
Current debt $ 478 $ -
Other current liabilities 3,421 3,824
Long-term debt 11,110 11,149
Midstream subsidiary note payable to a related party 1,349 1,599
Other long-term liabilities 13,225 13,136
Stockholders' equity 20,667 19,928
Noncontrolling interests     458       487  
Total Liabilities and Equity   $ 50,708     $ 50,123  
Capitalization        
Total debt $ 12,937 $ 12,748
Stockholders' equity     20,667       19,928  
Total   $ 33,604     $ 32,676  
Capitalization Ratios        
Total debt 38 % 39 %
Stockholders' equity     62 %     61 %
Anadarko Petroleum Corporation
(Unaudited)
                 
Sales Volumes and Prices
 
Average Daily Volumes Sales Volumes Average Sales Price
Crude Oil & Crude Oil & Crude Oil &
Natural Gas Condensate NGLs Natural Gas Condensate NGLs Natural Gas Condensate NGLs
MMcf/d MBbls/d MBbls/d Bcf MMBbls MMBbls Per Mcf Per Bbl Per Bbl
Quarter Ended March 31, 2010
United States 2,393 139 65 215 12 6 $ 5.02 $ 74.98 $ 46.64
Algeria 69 6 $ 76.04
Other International     14       2       $ 73.16  
Total   2,393   222   65   215   20     6   $ 5.02 $ 75.18 $ 46.64
 
Quarter Ended March 31, 2009
United States 2,315 103 40

208

9 4 $ 4.18 $ 38.45 $ 23.05
Algeria 58 5 $ 45.50
Other International     13       1       $ 36.79  
Total   2,315   174   40   208   15     4   $ 4.18 $ 40.68 $ 23.05
 
                                       
 
 

Average Daily Volumes
MBOE/d

 

Sales Volumes

MMBOE

 

 
Quarter Ended March 31, 2010 686 62
Quarter Ended March 31, 2009 600 54
                                       
 
Sales Revenue and Commodity Derivatives
 
 
Sales Commodity Derivatives Gain (Loss)
Crude Oil & Natural Gas Crude Oil & Condensate
millions Natural Gas   Condensate   NGLs Realized Unrealized   Realized Unrealized
Quarter Ended March 31, 2010
United States $ 1,081 $ 935 $ 274 $ 19 $ 566 $ (1 ) $ (5 )
Algeria 470 3 6
Other International     97          
Total $ 1,081 $ 1,502 $ 274 $ 19 $ 566   $ 2   $ 1  
 
Quarter Ended March 31, 2009
United States $ 871 $ 356 $ 83 $ 86 $ (277 ) $ 27 $ (18 )
Algeria 237 10 (29 )
Other International     43          
Total $ 871 $ 636 $ 83 $ 86 $ (277 ) $ 37   $ (47 )
Anadarko Petroleum Corporation
Financial and Operating Guidance
Continuing Operations
As of May 3, 2010
     
 
2nd Qtr Total Year
Guidance Guidance
 
Units Units
 
Total Sales (MMBOE) 57 - 60 230 - 234
 
Crude Oil (MBbl/d): 190 - 202 190 - 195
 
United States 125 - 130 121 - 124
Algeria 54 - 56 55 - 57
Other International 14 - 17 13 - 14
 
Natural Gas (MMcf/d):
 
United States 2,250 - 2,350 2,300 - 2,350
 
Natural Gas Liquids (MBbl/d):
 
United States 58 - 62 58 - 60
 
                   
 
$ / Unit $ / Unit
Price Differentials vs NYMEX (w/o hedges)
 
Crude Oil ($/Bbl): (4.00 ) - (6.00 ) (3.50 ) - (4.50 )
 
United States (4.00 ) - (6.00 ) (4.50 ) - (6.00 )
Algeria 1.00 - (1.00 ) (1.00 ) - (2.00 )
Other International (6.00 ) - (11.00 ) (6.00 ) - (10.00 )
 
 
Natural Gas ($/Mcf):
 
United States (0.10 ) - (0.40 ) (0.25 ) - (0.50 )
Anadarko Petroleum Corporation
Financial and Operating Guidance
Continuing Operations
As of May 3, 2010
     
 
2nd Qtr Total Year
Guidance Guidance
 
$ MM $ MM
Other Revenues:
Marketing and Gathering Margin 40 - 50 150 - 180
Minerals and Other 15 - 25 50 - 75
 
                   
Costs and Expenses:
$ / Boe $ / Boe
 
Oil & Gas Direct Operating 3.75 - 4.00 4.00 - 4.25
Oil & Gas Transportation/Other 3.00 - 3.25 3.00 - 3.25
Depreciation, Depletion and Amortization 15.50 - 16.00 15.50 - 16.00
Production Taxes (% of Revenue) 10.0 % - 12.0 % 10.0 % - 11.0 %
 
$ MM $ MM
 
General and Administrative 225 - 235 910 - 940
Exploration Expense
Non-Cash 190 - 210 875 - 925
Cash 70 - 80 275 - 325
Interest Expense (net) 200 - 210 750 - 775
Other (Income) Expense (10 ) - 10 (20 ) - 20
 
 
Tax Rate (all current)
Algeria 55 % - 65 % 55 % - 65 %
Rest of Company 40 % - 50 % 30 % - 40 %
                   
 
Avg. Shares Outstanding (MM)
 
Basic 493 - 495 493 - 495
Diluted 496 - 498 495 - 497
 
$ MM $ MM
Capital Investment:
 
Capital Projects 1,275 - 1,470 5,175 - 5,470
Capitalized Interest 25 - 30 125 - 130
Anadarko Petroleum Corporation
Commodity Hedge Positions (Excluding Natural Gas Basis)
As of May 3, 2010
   
 
 

Volume

Weighted Average Price per MMBtu

(thousand

MMBtu/d)

Floor Sold Floor Purchased   Ceiling Sold
Natural Gas

Three-Way Collars

  2010

1,630 $ 4.22 $ 5.59 $ 8.23

  2011

480 $ 5.00 $ 6.50 $ 8.29

  2012

500 $ 5.00 $ 6.50 $ 9.03
 
Fixed Price - Financial
2010 90 $ 6.10
2011 90 $ 6.17
 
 

Volume

Weighted Average Price per barrel

(thousand

MBbls/d)

Floor Sold Floor Purchased   Ceiling Sold
Crude Oil
Three-Way Collars

  2010

129 $ 49.34 $ 64.34 $ 90.73

  2011

126 $ 64.29 $ 79.29 $ 99.95

  2012

2 $ 35.00 $ 50.00 $ 92.50
Interest Rate Derivatives
As of May 3, 2010
                     
Instrument   Notional Amt.   Start Date   Maturity   Rate Paid   Rate Received
         
Swap $750 Million Oct-2011 Oct-2021 4.72% 3M LIBOR
Swap $1,250 Million Oct-2011 Oct-2041 4.83% 3M LIBOR
Swap $250 Million Oct-2012 Oct-2022 4.91% 3M LIBOR
Swap

$750 Million

Oct-2012 Oct-2042 4.80% 3M LIBOR
Anadarko Petroleum Corporation
Natural Gas Basis Hedge Positions
As of May 3, 2010
 

Volume

 

(thousand

Price per

MMBtu/d)

MMBtu

Basis Swaps

2010

Mid Continent 125 $ (0.83 )
Rocky Mountains 495 $ (1.01 )
620 $ (0.98 )
 
2011 15 $ (0.76 )
Mid Continent 30 $ (2.22 )
Rocky Mountains 45 $ (1.74 )
Rockies Export Firm Transportation
As of May 3, 2010
(Only shown through 2012)
 
  Daily Volume (MMMBtus)
by Pricing Point
Delivery/Pricing Point
2010
Mid Continent 491
West Coast 77
Mid West** 250
818
2011
Mid Continent 491
West Coast* 283
Mid West** 250
1,024
2012***
Mid Continent 491
West Coast 283
Mid West 250
1,024
 
 
*New agreement with Ruby estimated to begin in March 2011.
**New agreement with Bison estimated to begin in November 2010.
***It is assumed that any export contracts set to expire in 2012 will be extended

CONTACT:
Anadarko Petroleum Corporation
MEDIA:
John Christiansen, 832-636-8736
john.christiansen@anadarko.com
or
Matt Carmichael, 832-636-2845
matt.carmichael@anadarko.com
or
INVESTORS:
John Colglazier, 832-636-2306
john.colglazier@anadarko.com
or
Chris Campbell, CFA, 832-636-8434
chris.campbell@anadarko.com
or
Dean Hennings, 832-636-2462
dean.hennings@anadarko.com