Anadarko Announces 2015 Fourth-Quarter And Full-Year Results

HOUSTON, Feb. 1, 2016 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced 2015 fourth-quarter results, reporting a net loss attributable to common stockholders of $1.250 billion, or $2.45 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items increased the net loss by $954 million, or $1.88 per share (diluted), on an after-tax basis.⁽¹⁾ Cash flow from operating activities in the fourth quarter of 2015 was $257 million, and discretionary cash flow totaled $810 million.⁽²⁾           

For the year ended Dec. 31, 2015, Anadarko reported a net loss attributable to common stockholders of $6.692 billion, or $13.18 per share (diluted). Full-year 2015 net cash used in operating activities was $1.877 billion. Discretionary cash flow for the year totaled $4.657 billion.⁽²⁾

2015 HIGHLIGHTS

• Reduced year-over-year capital expenditures by almost 40 percent, while delivering 4-percent divestiture-adjusted⁽³⁾ sales-volume growth over 2014
• Achieved an organic reserve-replacement ratio of more than 130 percent before the effects of price revisions
• Closed $2.0 billion of monetizations

"As discussed last year at this time, we did not expect oil prices to recover in 2015 and believed it could take well into 2016 before markets would stabilize on a sustained basis, costs would become more aligned with the new operating environment and investments in short-cycle assets would be more attractive. Therefore, value enhancement drove our capital-allocation philosophy," said Anadarko Chairman, President and CEO Al Walker. "As a result, we reduced our year-over-year spending in 2015 by more than $3 billion, down nearly 40 percent from the previous year, with the largest portion of this reduction coming from our short-cycle opportunities. Through the hard work and innovation of our employees, we exceeded our initial expectations on nearly every operating metric. We dramatically improved efficiencies and reduced controllable spending by approximately $500 million, while enhancing our base production, and delivering an incremental 25,000 barrels per day of higher-margin oil sales volumes. In addition, we closed $2 billion of monetizations, significantly in excess of our initial expectations.

"As we consider capital allocation for 2016, greater market dislocation appears likely, and the need to again materially lower our capital spending, while continuing to pursue value creation and preservation, is our best course of action," added Walker. "In light of this, we anticipate recommending to our Board an initial 2016 budget of approximately $2.8 billion, which would be nearly 50 percent lower than our actual 2015 capital investments and almost 70 percent lower than 2014. On March 1, we will host an investor conference call and look forward to going into greater detail at that time about our definitive 2016 capital plans and expectations.

"We believe the accomplishments achieved in 2015, coupled with the steps we are taking in 2016 to materially reduce our capital spending, leverage our competitive advantages and protect our balance sheet, will serve our shareholders well. These actions should enable us to successfully manage through the current market volatility and position Anadarko for future success."

SALES VOLUMES AND PROVED RESERVES

Anadarko's full-year sales volumes of crude oil, natural gas and natural gas liquids (NGLs) totaled 305 million barrels of oil equivalent (BOE), or an average of 836,000 BOE per day. Fourth-quarter 2015 sales volumes of crude oil, natural gas and NGLs averaged approximately 779,000 BOE per day.

Anadarko organically added 407 million BOE of proved reserves in 2015 before the effects of price revisions and incurred oil and natural gas exploration and development costs of approximately $5.8 billion.⁽²⁾ The company estimates its proved reserves at year-end 2015 totaled approximately 2.06 billion BOE, with nearly 80 percent of its reserves categorized as proved developed. At year-end 2015, Anadarko's proved reserves were comprised of 52 percent liquids and 48 percent natural gas.

OPERATING HIGHLIGHTS

In 2015, Anadarko increased its percentage of capital investments in longer cash cycle opportunities, such as advancing its large-scale deepwater projects and exploration. The company's U.S. onshore investments were primarily allocated toward the Wattenberg field in northeastern Colorado and the Delaware Basin in West Texas, both of which demonstrated strong growth year over year. In the Wattenberg field, relative to 2014, Anadarko reduced drilling costs per foot by 50 percent and completion costs by 32 percent, while increasing oil sales volumes almost 30 percent. Anadarko also continued to successfully delineate its top-tier 600,000-gross-acre position with multiple stacked play opportunities in the Delaware Basin. With estimated ultimate recoveries (EURs) already approaching 1 million BOE per well in the Wolfcamp Shale, encouraging results from the Second Bone Spring formation, improved efficiencies, cost reductions, and expanded midstream infrastructure, the company expects to increase its identified drilling locations and recoverable-resource estimates in the basin beyond the current estimates of more than 1 billion BOE as the program continues to advance.

Anadarko also continued to demonstrate its industry-leading project management expertise as its Lucius development in the Gulf of Mexico achieved first oil on budget and on schedule in January 2015. Subsequent to year-end, the Anadarko-operated Heidelberg spar successfully achieved first oil with excellent safety performance, three months ahead of schedule and under budget.

During 2015, Anadarko made significant progress advancing its Mozambique LNG project. Milestones included the signing of a Unitization and Unit Operating agreement with Eni for the development of the natural gas resources that straddle Offshore Area 1 and Offshore Area 4, signing a Memorandum of Understanding with the Government of Mozambique to provide natural gas from the development for domestic use, selecting a contractor for the initial onshore development, and progressing more than 8 million tonnes per annum of LNG offtake to long-term sales contracts. Offshore Ghana, the third-party operated TEN development was more than 80-percent complete at year-end and on track to achieve first oil in the third quarter of 2016.

OPERATIONS REPORT

For additional details on Anadarko's fourth-quarter 2015 operations and exploration program, please refer to the comprehensive Operations Report available at www.anadarko.com.

FINANCIAL HIGHLIGHTS

Anadarko ended 2015 with $939 million of cash on hand, which reflects remittance of the $5.2 billion final payment resolving the Tronox Adversary Proceeding. In December, the company extended the maturity of its $3 billion unsecured revolving credit facility to January 2021, and in January 2016, Anadarko renewed its $2 billion 364-day credit facility to a new maturity in 2017, further supporting the company's strong liquidity position.

During the year, the company generated approximately $4.7 billion of discretionary cash flow⁽²⁾ and $2.0 billion from monetizations, which more than covered its capital investments of approximately $5.9 billion, including approximately $525 million of capital investments by its subsidiary Western Gas Partners, LP (NYSE: WES).

CONFERENCE CALL TOMORROW AT 8 A.M. CST, 9 A.M. EST

Anadarko will host a conference call on Tuesday, Feb. 2, 2016, at 8 a.m. Central Standard Time (9 a.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2015 results. The dial-in number is 844.836.8743 in the U.S. or 412.317.5438 internationally. Participants can register for the conference at http://dpregister.com/10077883. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast and slide presentation, please visit www.anadarko.com. A replay of the call will be available on the website for approximately 30 days following the conference call.

FINANCIAL DATA

Nine pages of summary financial data follow, including costs incurred, proved reserves and current hedge positions.

⁽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.

⁽³⁾ See the accompanying table for a reconciliation of "divestiture-adjusted" or "same-store" sales volumes, which are intended to present performance of Anadarko's continuing asset base, giving effect to recent divestitures.

Logo - http://photos.prnewswire.com/prnh/20141103/156201LOGO

Anadarko Petroleum Corporation's mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world's health and welfare. As of year-end 2015, the company had approximately 2.06 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. For more information about Anadarko and APC Flash Feed updates, please visit www.anadarko.com.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including Anadarko's ability to realize its expectations regarding performance in this challenging economic environment, finalize year-end reserves, and timely complete and commercially operate the projects and drilling prospects identified in this news release, receipt of final approval of the Unitization and Unit Operating agreement from the Government of Mozambique, the ability of Anadarko and the Government of Mozambique to finalize the legal and contractual framework relating to the Memorandum of Understanding, and Anadarko's ability to enter into a definitive agreement with the contractor for onshore development, successfully plan, secure necessary government approvals, finance, build and operate the necessary infrastructure and LNG park in Mozambique, increase its recoverable-resource estimate in the Delaware Basin, and achieve production and budget expectations on its mega projects. See "Risk Factors" in the company's 2014 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.

Cautionary Note to Investors: The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their regulatory filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definition for such items. Anadarko uses terms in this news release such as "estimated ultimate recoveries," "recoverable-resource estimate," and similar terms that the SEC's guidelines strictly prohibit Anadarko from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in Anadarko's Form 10-K for the year ended Dec. 31, 2014, File No. 001-08968, available from Anadarko at www.anadarko.com or by writing Anadarko at: Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380, Attn: Investor Relations. This form may also be obtained by contacting the SEC at 1-800-SEC-0330.

ANADARKO CONTACTS

MEDIA:
John Christiansen, [email protected], 832.636.8736
Stephanie Moreland, [email protected], 832.636.2912

INVESTORS:
John Colglazier, [email protected], 832.636.2306
Jeremy Smith, [email protected], 832.636.1544
Shandell Szabo, [email protected], 832.636.3977

Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of net income (loss) attributable to common stockholders (GAAP) to adjusted net income (loss) (non-GAAP), cash provided by operating activities (GAAP) to discretionary cash flow from operations (non-GAAP), as well as free cash flow (non-GAAP) as required under Regulation G of the Securities Exchange Act of 1934. Management uses adjusted net income (loss) to evaluate the Company's operational trends and performance.

Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures

Management uses discretionary cash flow from operations because it is useful in comparisons of oil and gas exploration and production companies as it excludes certain fluctuations in assets and liabilities and current taxes related to certain items affecting comparability. Management uses free cash flow to demonstrate the Company's ability to internally fund capital expenditures and to service or incur additional debt.

Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures

Presented below are reconciliations of costs incurred (GAAP) to oil and natural gas exploration and development costs (non-GAAP) and total debt (GAAP) to net debt (non-GAAP). Management believes oil and natural gas exploration and development costs is a more accurate reflection of the expenditures incurred during the current year, excluding certain obligations to be paid in future periods. Management uses net debt as a measure of the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.