Exploration & Production | Quarterly / Earnings Reports | First Quarter (1Q) Update

Anadarko's Record Q1 Sales Volumes Fueled by U.S. Unconventionals

Share Print Bookmark    |    Monday,May 05,2014

Anadarko Petroleum Corporation has reported its financial and operating results for the first quarter of 2014, including a first-quarter net loss attributable to common stockholders of $2.669 billion, or $5.30 per share (diluted).

The net loss includes certain items typically excluded by the investment community in published estimates, which in aggregate decreased net income by $3.308 billion or $6.56 per share (diluted) on an after-tax basisincluding both a contingent loss of $4.018 billion associated with the Tronox Adversary Proceeding settlement agreement and a $946 million gain associated with the sale of a portion of Anadarko's interest in Offshore Area 1 in Mozambique. Cash flow from operating activities in the first quarter of 2014 was $1.729 billion, and discretionary cash flow totaled $2.523 billion.

First Quarter 2014 Highlights:

• Delivered record daily sales volumes of 819,000 barrels of oil equivalent (BOE) per day, highlighted by a same-store-sales increase of approximately 69,000 BOE per day (12 percent) from the U.S. onshore relative to the first quarter of 2013
• Achieved startup of the Lancaster cryogenic plant and Front Range pipeline, facilitating continued growth of Anadarko's Wattenberg field in Colorado
• Announced a $1.075 billion China divestiture and closed both the $2.64 billion sale of a portion of its interest in Mozambique's Offshore Area 1 and the $581 million Pinedale/Jonah divestiture
• Installed the topsides, umbilicals and export pipelines at the Lucius spar in the Gulf of Mexico

Al Walker, Anadarko Chairman, President and CEO, commented: "Our operating performance during the first quarter was outstanding, delivering record sales volumes that were above the high end of the guidance. Our people and portfolio continue to demonstrate the ability to deliver sustained growth and, with the uncertainty associated with the Tronox litigation largely behind us, we have the confidence and flexibility to further accelerate growth. We are raising the midpoint of our full-year sales-volume guidance by 3.5 million BOE, with only a modest increase in our capital program. We also continue to actively manage our portfolio and evaluate other means to drive shareholder value."

Operations Summary

During the first quarter, Anadarko's U.S. oil sales volumes were approximately 10,000 barrels per day above the midpoint of guidance, primarily driven by growth in the Wattenberg field, Eagleford Shale and Delaware Basin. Anadarko's first-quarter 2014 sales volumes of natural gas, crude oil and natural gas liquids (NGLs) totaled 74 million BOE, or an average of 819,000 BOE per day, including 17,000 BOE per day associated with the announced or closed divestitures of the company's interests in China's Bohai Bay and Wyoming's Pinedale/Jonah area.

Wattenberg Field

The Wattenberg field achieved a 19,000-barrels-per-day increase in liquids volumes over the first quarter of 2013, representing a 30-percent year-over-year increase. 

Eagle Ford & Delaware Basin

The Eagleford Shale also contributed to the first-quarter growth with a 46-percent year-over-year increase in liquids sales volumes, more than half of which was oil. The Delaware Basin, which includes the company's increased activity in the Wolfcamp Shale, provided a 6,000-barrels-per-day increase in liquids sales volumes.

Gulf of Mexico & International

Anadarko also continued to advance its deepwater mega projects in the Gulf of Mexico, as it successfully installed the topsides at the Lucius spar and has nearly completed construction on the hull of the Heidelberg spar. Both projects remain on schedule and on budget with first oil anticipated in the second half of 2014 and in 2016, respectively.

In Mozambique, successful appraisal drilling activities in the Orca field increased the total estimated recoverable resources in Anadarko's Offshore Area 1 to a range of 50 to 70-plus trillion cubic feet of natural gas. In addition, Anadarko continued to advance the Mozambique LNG project by adding incremental non-binding LNG off-take agreements. 

Financial Summary

Subsequent to quarter end, Anadarko announced a $5.15 billion settlement agreement in the Tronox Adversary Proceeding, representing a principal sum of approximately $3.98 billion plus interest. The settlement agreement is subject to recommendation by the Bankruptcy Court, approval by the District Court, and the issuance of an injunction barring similar claims from being asserted by third parties.

Anadarko Executive Vice President, Finance and CFO, Bob Gwin, commented: "During the quarter, we generated more than $2.5 billion of discretionary cash flow, closed the Mozambique and Pinedale/Jonah transactions and ended the quarter in a very strong financial position with approximately $6 billion of cash on hand, plus access to our $5 billion revolving credit facility. The strength of our balance sheet, high-margin cash-generating capability and proceeds from asset monetizations provide the capability to fund the Tronox settlement, along with the flexibility to expand our robust 2014 capital program and support additional methods to enhance value."