Anadarko Announces Second-Quarter 2015 Results

HOUSTON, July 28, 2015 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced its financial and operating results for the second quarter of 2015, including net income attributable to common stockholders of $61 million, or $0.12 per share (diluted). These results include certain items typically excluded by the investment community in published estimates, which in the aggregate increased net income by $57 million or $0.11 per share (diluted).⁽¹⁾ Net cash flow from operating activities in the second quarter of 2015 was $1.243 billion, and discretionary cash flow from operations totaled $1.373 billion.⁽²⁾               

HIGHLIGHTS

• Increased year-over-year oil sales volumes by 42,000 barrels per day, adjusted for divestitures⁽³⁾
• Achieved large-scale project milestones in the Gulf of Mexico and Mozambique
• Announced deepwater exploration success in a frontier basin offshore Colombia
• Announced more than $1.7 billion of monetizations year to date

"During the second quarter, we delivered more than 18,000 barrels per day of higher-margin oil sales volumes above our guidance, driven by continued improvements in productivity and ongoing operating efficiencies," said Anadarko Chairman, President and CEO Al Walker. "The operating improvements achieved to date are contributing to an expected full-year increase over 2014 of 13 percent, or about 35,000 barrels of oil per day, enhancing our relative cash margins and enabling us to drill more than 100 additional wells this year – all while staying within our capital guidance. In addition, we've created significant option value through our exploration success offshore Colombia and in the Gulf of Mexico, and accelerated value through active portfolio management. We believe these actions and differentiating achievements, the depth and strength of our portfolio, and the commitment of our employees, position us well for continued success."

OPERATIONS SUMMARY

During the second quarter, Anadarko's sales volumes of oil, natural gas and natural gas liquids (NGLs) totaled 77 million barrels of oil equivalent (BOE), or an average of 846,000 BOE per day. The company also updated its full-year 2015 sales-volume guidance to a range of 298 million to 302 million BOE, which excludes 2015 sales volumes associated with the divestitures of EOR and Bossier.

In the U.S. onshore, Anadarko increased oil sales volumes by approximately 30 percent year over year on a divestiture-adjusted basis,⁽³⁾ driven by the Wattenberg field, Eagleford Shale and Delaware Basin, while natural-gas sales volumes were lower, reflecting third-party infrastructure downtime and curtailments, as well as the company's storage program.

During the quarter, Anadarko achieved a significant production milestone, averaging 101,000 barrels of oil per day (BOPD) in the Wattenberg field in Colorado, while also achieving exceptional efficiency improvements. The company has realized a significant reduction in drilling cost per foot over a two-year period and is currently drilling new Wattenberg horizontal wells for approximately $1 million per well. During the second quarter, Anadarko also achieved startup at its 300-million-cubic-feet-per-day (MMcf/d) Lancaster II cryogenic expansion, providing additional growth capacity for the Wattenberg field.

Anadarko expects to achieve its objective of drilling more than 200 wells in the Eagleford Shale this year with fewer rigs than initially anticipated. Efficiency gains are enabling Anadarko to re-allocate rigs from the Eagleford Shale to the Wolfcamp Shale oil play in the Delaware Basin of West Texas. During the quarter, the Delaware Basin increased year-over-year oil sales volumes by almost 30 percent and achieved startup at the 200-MMcf/d Mi Vida cryogenic gas plant.

In the deepwater Gulf of Mexico, Anadarko's Lucius facility achieved name-plate capacity of 80,000 BOPD with production stabilizing during the quarter. The company also continued to advance the 80,000-BOPD Heidelberg spar on schedule with the successful installation of the hull and completion of the topsides.

The Mozambique liquefied natural gas (LNG) project also continues to advance with the selection of a consortium consisting of CB&I, Chiyoda Corporation and Saipem (CCS JV) for the initial development of the onshore LNG park. The scope of the work includes two 6-million-tonnes-per-annum (MMTPA) LNG trains, which is a 20-percent increase in the original capacity expectations with no change to estimated costs.

Anadarko continues an active deepwater exploration program. The company's first well, Kronos, in the frontier basin offshore Colombia, encountered 130 to 230 net feet of natural gas pay in the upper objective, proving the presence of a working petroleum system and validating the company's geologic and seismic interpretations. Drilling is ongoing toward the deeper objective before mobilizing the rig to drill the Calasu prospect, which is also located in the 4.5-million-acre Grand Fuerte Block, approximately 100 miles northeast of the Kronos well. In the Gulf of Mexico, Anadarko spud its third appraisal well in the Shenandoah field and plans to commence drilling on an appraisal well to the previously announced Yeti discovery, which encountered more than 270 net feet of oil pay.

FINANCIAL SUMMARY

Anadarko ended the second quarter with approximately $2.2 billion of cash on hand. Year to date, Anadarko has reached agreements to divest more than $1.1 billion in assets, including the recently announced $440 million divestiture of its Bossier natural gas field and associated midstream infrastructure. In addition, Anadarko accelerated more than $575 million of value from the secondary sale of Western Gas Equity Partners, LP (NYSE: WGP) units and a WGP-linked tangible equity unit offering.

OPERATIONS REPORT

For details on Anadarko's operating areas and exploration program, including tables illustrating same-store sales information,⁽³⁾ please refer to the comprehensive report on second-quarter 2015 activity. The report is available at www.anadarko.com.

CONFERENCE CALL TOMORROW AT 8 A.M. CDT, 9 A.M. EDT

Anadarko will host a conference call on Wednesday, July 29, 2015, at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) to discuss second-quarter results, current operations and the company's outlook for the remainder of 2015. The dial-in number is 866.777.2509 in the United States or 412.317.5413 internationally. Participants can register for the conference at

http://dpregister.com/10068168. 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 current hedge positions and updated financial and production guidance.

⁽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.

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 2014, the company had approximately 2.86 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.

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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 and meet financial and operating guidance, timely complete and commercially operate the projects and drilling prospects identified in this news release, consummate the transaction described in this release, enter into a definitive agreement with CCS JV, successfully plan, secure necessary government approvals, finance, build and operate the necessary infrastructure and LNG park, and achieve production and budget expectations. 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.

ANADARKO CONTACTS

MEDIA:
John Christiansen, [email protected], 832.636.8736
Stephanie Moreland, [email protected], 832.636.2912
Christina Ramirez, [email protected], 832.636.8687

INVESTORS:
John Colglazier, [email protected], 832.636.2306
Robin Fielder, [email protected], 832.636.1462
Jeremy Smith, [email protected], 832.636.1544

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.

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 that would not be readily satisfied by its cash and cash equivalents on hand.

PDF - http://origin-qps.onstreammedia.com/origin/multivu_archive/ENR/247937-2Q15_OpsReport_FINAL.pdf

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