Anadarko Announces Third-Quarter 2015 Results

HOUSTON, Oct. 27, 2015 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced its financial and operating results for the third quarter of 2015, including a net loss attributable to common stockholders of $2.235 billion, or $4.41 per share (diluted). These results include certain items typically excluded by the investment community in published estimates, which in aggregate decreased net income by $1.877 billion or $3.69 per share (diluted), on an after-tax basis.⁽¹⁾ Net cash flow from operating activities in the third quarter of 2015 was $1.127 billion, and discretionary cash flow from operations totaled $979 million.⁽²⁾   

HIGHLIGHTS

• Exceeded the midpoint of guidance by 6,000 barrels per day of higher-margin U.S. oil sales volumes
• Achieved capital expenditures and lease operating expense (LOE) per barrel of oil equivalent (BOE) below the low end of guidance
• Completed a successful appraisal test at the Shenandoah field in the Gulf of Mexico
• Accomplished a project milestone at the Heidelberg spar with the setting of the topsides
• Continued to actively manage the portfolio by monetizing nearly $2 billion of assets year to date

"We remain committed to building and preserving value in this challenging environment," said Anadarko Chairman, President and CEO Al Walker. "During the third quarter, we continued our focus on maintaining long-term flexibility, while enhancing short-cycle returns by delivering higher-margin sales volumes for lower costs. Our employees have continued to do outstanding work optimizing our performance by moderating our base decline, safely improving efficiencies and rig productivity, and achieving greater cost savings. These efforts and achievements have us well positioned to create differentiating value today and to accelerate activity when the market begins to reward growth again."

OPERATIONS SUMMARY

During the third quarter, Anadarko's sales volumes of crude oil, natural gas and natural gas liquids (NGLs) totaled 73 million BOE, or an average of 787,000 BOE per day. These results include an increase in oil sales volumes of 11,000 barrels of oil per day (BOPD) on a divestiture-adjusted basis⁽³⁾ over the third quarter of 2014. Anadarko also updated its full-year 2015 sales-volume guidance to a range of 290 million to 292 million BOE, which excludes 2015 sales volumes associated with the divestitures of EOR, Bossier and Powder River Basin coalbed methane (CBM).

In the U.S. onshore, Anadarko increased oil sales volumes by 11 percent year over year on a divestiture-adjusted basis.⁽³⁾ In the Wattenberg field, Anadarko increased oil sales volumes by 14 percent versus the third quarter of 2014. During the quarter, the Wattenberg team continued to achieve significant improvements in its drilling metrics. As a result, drilling cycle times were reduced by approximately 20 percent with a corresponding 15-percent reduction in drilling costs per foot versus the second quarter of 2015.

Anadarko continues to position its extensive Delaware Basin Wolfcamp Shale opportunity for future oil growth. As a result of improved well recoveries, now approaching 1 million BOE per well, and efficiency gains and cost reductions in the Wolfcamp Shale, this emerging oil play is beginning to contend with Wattenberg in terms of the most attractive economics in the company's U.S. onshore portfolio. Anadarko has successfully reduced drilling costs in the Wolfcamp Shale to around $7.5 million per well with the expected ability to achieve further reductions of $1.5 million to $2 million per well with a future move to field-wide pad drilling. During the quarter, the company also successfully drilled its first test well in the Second Bone Spring, which demonstrated an initial production rate of more than 1,000 BOPD.

In the Gulf of Mexico, the company continued to successfully advance the Heidelberg project with the installation of the topsides. With the significant milestones achieved to date, first oil at Heidelberg has been accelerated and is now anticipated in the second quarter of 2016 from the first three subsea wells, with production from two additional wells coming on line at a later date. Also in the Gulf of Mexico, the company's third appraisal test of the Shenandoah discovery encountered more than 620 net feet of oil pay, and an appraisal well at the Yeti discovery was spud during the third quarter.

OPERATIONS REPORT

For additional details on the operations described above and other operating areas and exploration activities, please refer to Anadarko's comprehensive report on third-quarter 2015 activity. The report is available at www.anadarko.com.

FINANCIAL SUMMARY

Anadarko ended the quarter with $2.1 billion of cash on hand. Year to date, Anadarko has reached agreements to monetize or closed asset monetizations totaling approximately $2.0 billion, including the recent Powder River Basin CBM upstream divestiture, which closed Sept. 1, and the associated CBM midstream transaction, which is expected to close in the fourth quarter.

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

Anadarko will host a conference call on Wednesday, Oct. 28, 2015, at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) to discuss third-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/10073998. 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, a reconciliation of "divestiture-adjusted" or "same-store" sales, 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, achieve further drilling cost reductions, consummate the transaction described in this release, 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

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 to 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.