Anadarko announces third-quarter 2017 results
Wednesday, Nov 01, 2017
Anadarko Petroleum Corporation (NYSE: APC) announced its third-quarter 2017 results, reporting a net loss attributable to common stockholders of $699 million, or $1.27 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 $272 million, or $0.50 per share (diluted), on an after-tax basis.(1) Net cash provided by operating activities in the third quarter of 2017 was $639 million.

RECENT HIGHLIGHTS

  • Announced a $2.5 billion share-repurchase program and entered into an accelerated share repurchase (ASR) agreement to execute upon the first $1.0 billion by year end
  • Achieved double-digit oil-volume growth over second-quarter 2017 in the Delaware Basin, DJ Basin and deepwater Gulf of Mexico assets
  • Improved oil production mix to 57 percent versus 42 percent in the third quarter of 2016, significantly improving margins per barrel
  • Entered into an agreement to sell the company's Moxa asset in southwest Wyoming for approximately $350 million
  • Received clarity on the Ghana maritime boundary, enabling additional high-margin oil development, and completed the foundational Legal and Contractual Framework for the Mozambique LNG project

"I am very proud of the efforts exhibited by our people and the results achieved in the face of an unusually active hurricane season in the Gulf of Mexico and a continuing volatile commodity environment," said Al Walker, Anadarko Chairman, President and CEO. "We have made significant progress in shifting our production mix toward higher-value oil, which has improved our margins per barrel(2) by about 34 percent year over year. We expect to improve our margins further as we finalize the sale of our Moxa gas asset, continue focusing investments in our high-quality oil plays, and drive greater efficiencies into the system. Although we have adjusted our full-year sales-volume guidance to reflect the impacts of hurricanes Harvey, Irma and Nate, as well as the sale of our Moxa asset, we still expect to exit 2017 with production rates of approximately 150,000 barrels of oil per day combined from the Delaware and DJ basins, and more than 130,000 barrels of oil per day from the deepwater Gulf of Mexico.

"Looking to 2018, we will continue to demonstrate financial discipline as a foundational principle," added Walker. "We will remain focused on returns by continuing to allocate upstream capital toward the higher-margin assets in our portfolio, which should generate substantial free cash flow in a $50 oil-price environment, with total capital spending, including Anadarko midstream spending on infrastructure in the Delaware Basin, inside of discretionary cash flow from operations."

OPERATIONAL HIGHLIGHTS

Anadarko's third-quarter 2017 sales volume of oil, natural gas and natural gas liquids (NGLs) totaled 58 million barrels of oil equivalent (BOE), or an average of 626,000 BOE per day.

In the Delaware Basin, Anadarko remains on track to achieve its expected exit rate of approximately 50,000 barrels of oil per day (BOPD). In the third quarter, the company achieved a new oil sales-volume record of 44,500 BOPD, while averaging 37,000 BOPD - a 13-percent increase over the second quarter of 2017. Anadarko averaged 16 rigs and six completions crews in the basin during the quarter, as it continued to focus on capturing operatorship over approximately 70 percent of its gross acreage position. Anadarko also made significant progress in applying its proven development model to the Delaware Basin, which includes building gathering and processing infrastructure to enable future growth and expanding takeaway capacity.

Anadarko also has a clear line of sight to reaching its expected exit rate of about 100,000 BOPD in the DJ Basin, where in the third quarter it achieved an oil production record of more than 90,000 BOPD, while averaging 83,000 BOPD, representing a 10-percent increase over the prior quarter. The company averaged six operated rigs and four completions crews in the basin during the quarter. The number of wells turned to sales increased by 70 percent versus the second-quarter 2017. The company continues to see strong results from its new completion design, which has been applied to more than 70 wells, the majority of which have been producing more than 150 days. These wells are demonstrating a cumulative oil uplift of more than 40 percent when compared to the previous design.

In the deepwater Gulf of Mexico, the company increased oil production by more than 10 percent relative to the second quarter of 2017, averaging 126,000 BOPD during the quarter. Production of approximately 840,000 BOE was deferred during the quarter as a result of hurricanes Harvey and Irma. The company's hub-and-spoke infrastructure continues to deliver significant value with new tiebacks at Horn Mountain and Marlin. Anadarko also added new tieback opportunities as the apparent high bidder on 10 blocks in the most recent Gulf of Mexico lease sale.

International and Alaska sales volume averaged 102,000 barrels per day, slightly less than the prior quarter due to the timing of liftings in Algeria. The International Tribunal for the Law of the Sea (ITLOS) has defined the border between Ghana and Côte d'Ivoire, which enables continued development in the TEN field. In addition, the partnership received approval from the Ghanaian government for the Jubilee full-field plan of development earlier this month, with drilling operations expected to commence in 2018. Anadarko also is continuing to generate substantial momentum with its Mozambique LNG project, having finalized the "marine concession" agreements with the Government of Mozambique during the quarter. These agreements marked the completion of the foundational Legal and Contractual Framework. Subsequent to quarter end, Anadarko also reached a 20-year Sale and Purchase Agreement (SPA) for 2.6 million tonnes of LNG per annum with PTT Public Company Limited of Thailand. The SPA is pending approval by the Government of Thailand.

OPERATIONS REPORT

For additional details on Anadarko's third-quarter 2017 operations and exploration program, please refer to the comprehensive Operations Report available at the company website.

FINANCIAL SUMMARY

Anadarko ended the third quarter of 2017 with $5.25 billion of cash on hand. In September, the company announced a $2.5 billion share-repurchase program, which is authorized to extend through the end of 2018. Subsequently, Anadarko entered into an ASR agreement to complete the repurchase of $1.0 billion of shares prior to the end of 2017. In October, Anadarko entered into a definitive agreement to sell its Moxa asset in southwest Wyoming for approximately $350 million.

For more information, please visit: http://www.anadarko.com/

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