Press Release | Source: Anadarko Petroleum |
Anadarko Announces Financial and Operating Results for 2002
Friday January 31, 8:06 am ET
HOUSTON--(BUSINESS WIRE)--Jan. 31, 2003--Anadarko Petroleum Corporation (NYSE:APC-News)
INSIDE:
Financial & Operating Results
Conference Call Information
Summary Financials
Sales Volumes & Prices
Oil & Gas Reserves
Costs Incurred in Oil & Gas Producing Activities
Anadarko Petroleum Corporation (NYSE:APC -News) today announced financial results for the fourth quarter and full year 2002 and operating results from worldwide exploration and development drilling activity.
FOURTH QUARTER 2002
For the fourth quarter of 2002, the company reported net income available to common shareholders of $309 million, or $1.21 per share (diluted), compared with earnings of $108 million, or 41 cents per share (diluted)(1) for the fourth quarter of 2001. The increase in earnings is primarily due to higher commodity prices and higher oil sales volumes, which were partly offset by lower natural gas sales volumes.
Cash flow from operations before changes in assets and liabilities for the fourth quarter of 2002 totaled $713 million, or $2.76 per share (diluted), compared with $528 million, or $1.99 per share (diluted), for the same period in 2001.
Sales volumes during the fourth quarter of 2002 were flat compared to the same period in 2001 at about 49 million barrels of oil equivalent (BOE). Production increases in Algeria, Wyoming and Western Canada were offset by the effects of natural field declines and asset sales, along with two hurricanes in the Gulf.
FULL YEAR 2002
For the full year 2002, Anadarko reported net income available to common shareholders of $825 million, or $3.21 per share (diluted), on revenues of $3.86 billion, compared with a net loss of $188 million, or 75 cents per share (diluted)(1), on revenues of $4.72 billion(2) for 2001. Results for 2001 included the effect of a $1.57 billion non-cash, after-tax impairment of the carrying value of oil and gas properties. Excluding the effect of the impairment, 2001 earnings were $1.38 billion, or $5.21 per share (diluted). Earnings in 2002 were lower compared with 2001 excluding the impairment mainly because natural gas prices were 33 percent lower in 2002 compared with 2001.
Cash flow from operations before changes in assets and liabilities for 2002 totaled $2.21 billion, or $8.52 per share (diluted), compared with $3.43 billion, or $12.89 per share (diluted) in 2001.
Total natural gas, crude oil and natural gas liquids sales volumes for 2002 were 197 million BOE, compared with 199 million BOE in the prior year. Despite the modest decline in annual production, the company achieved growth in several areas of North America, taking into account the effect of divestitures of producing properties in Canada, Texas and Louisiana in 2002.
"We had a successful 2002, despite a challenging market environment in the first half of the year," said John Seitz, Anadarko President and CEO. "We did what we set out to do in terms of positioning Anadarko for sustainable growth in the future.
"We had expected 2002 to be an 'opportunity building' year and it was. By executing our strategic plan, we more than replaced our production with new reserves, made several good discoveries and an important acquisition that will add to our production and reserves in 2003 and in the future, and built a strong inventory of drilling locations," Seitz said.
"Despite production losses due to two hurricanes and the strikes in Venezuela, we beat our target of 196 million BOE.
"With stronger commodity prices - and still reasonable drilling and service costs - we're ready to start growing production again, and we're well positioned to do that in 2003 and 2004," Seitz said. "Nearly two-thirds of our 2003 capital budget of $2.3 billion is devoted to development projects. This budget also enables us to test significant exploration potential, particularly in the Gulf of Mexico and in several international basins," he added.
FOURTH QUARTER 2002 OPERATING HIGHLIGHTS
RESERVE REPLACEMENT
Anadarko's worldwide reserve replacement rate from all sources was 112 percent of annual production, with 219 million BOE of new reserves added. This figure includes the effect of reserve changes from all sources - drilling, producing property acquisitions and divestitures, and revisions to earlier estimates.
This is the 21st consecutive year that Anadarko has more than replaced annual production with new proved reserves.
Excluding acquisitions and divestitures in 2002 and the effect of a downward revision of Venezuelan reserves described below, the company replaced 106 percent of its 2002 production. Significant reserves were added in the Gulf of Mexico, Wyoming, Texas, Louisiana and Canada.
In the U.S. alone, Anadarko achieved a 185 percent reserve replacement rate. Excluding acquisitions and divestitures - principally the Howell acquisition, partly offset by several small divestitures - the company replaced 137 percent of its U.S. production.
At year-end, the company recorded a downward revision of 36 million barrels - representing roughly 16 percent of total 2002 reserve additions - from the Oritupano-Leona oilfield in Venezuela due to current prices. Under the terms of Anadarko's risk service contract with the national oil company of Venezuela, Anadarko earns a fee that is translated into barrels of oil based on current prices. This means that higher oil prices actually reduce the company's reported oil reserves and production volumes from that project; however, reserve and production fluctuations caused by current prices and reported using the economic interest calculation have essentially no impact on cash flow or the value of the project.
The company's worldwide replacement rate for the five-year period 1998-2002 was 368 percent of production, or 187 percent excluding the effect of acquisitions and divestitures. Anadarko's U.S. reserve replacement rate for the five-year period 1998-2002 was 325 percent, or 179 percent excluding acquisitions and divestitures, versus a five-year industry average of 111 percent for 1997-2001, which is the latest available data (source: U.S. Department of Energy).
PROVED RESERVES
Anadarko increased proved reserves worldwide by 1 percent to 2.33 billion BOE at year-end 2002, from 2.30 billion BOE at year-end 2001. In the U.S., proved reserves increased by 111 million BOE primarily from discoveries and the acquisition of Howell. On a worldwide basis, the U.S. increase was partly offset by the effect of asset sales, performance revisions and the significant downward revision in Venezuela.
FINDING & DEVELOPMENT COSTS
Anadarko's total worldwide finding costs for proved reserves averaged $10.52 per BOE in 2002, reflecting all costs of additions from drilling, property acquisitions and the effect of reserve revisions.
"This one-year finding and development cost number doesn't accurately reflect the exploration successes we achieved in some key areas in 2002," Seitz said.
"For example, in the United States, which is our single largest focus area, finding and development costs came in at $7.77 per BOE," Seitz said. "This reflects successful drilling in core areas such as Texas, Louisiana, Wyoming and the expansion of plays in the Gulf of Mexico. The purchase of new properties in Wyoming last year also added low-cost reserves with high potential for expanding future production and reserves," he noted.
"Several factors contributed to the higher one-year worldwide finding costs, but two had the greatest impact, adding nearly $2 a barrel to overall finding costs," Seitz said.
"The revision of Venezuelan reserves combined with large investments made in leases in the eastern Gulf of Mexico - which have not yet been drilled - raised our costs," Seitz said. "If you excluded these two factors, our finding and development costs would have been about $8.75 per BOE in 2002.
"We expect 2003 finding costs to be lower - probably in the $7 per BOE range," he noted.
Anadarko added reserves of 87 million BOE through property acquisitions during 2002 at an average price of $4.82 per BOE. The company sold 39 million BOE of non-core or low-margin reserves at an average price of $5.85 per BOE.
Anadarko Petroleum Corporation is one of the world's largest independent oil and gas exploration and production companies. Houston-based Anadarko is active in the U.S., Canada, Algeria and Qatar and is executing strategic exploration programs in several other countries. More information is available atwww.anadarko.com.
(1) In January 2002, Anadarko discontinued the amortization of goodwill in accordance with the Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Stated without amortization of goodwill, net income for the fourth quarter of 2001 would have been $124 million (47 cents per share - diluted) and the net loss for 2001 would have been $115 million (46 cents per share - diluted).
(2) In the third quarter of 2002, the Company adopted Emerging Issues Task Force (EITF) Issue No. 02-3, "Recognition and Reporting of Gains and Losses on Energy Trading Contracts." In accordance with EITF 02-3, marketing sales and purchases for prior periods have been reclassified to show net marketing margins as revenues. The marketing margins related to the Company's equity production are included in Gas Sales, Oil Sales and Natural Gas Liquids Sales and are reflected in commodity prices. The marketing margin related to purchases of third-party commodities is shown as Purchased Commodity Sales, which is included in Other Sales Revenue. This reclassification has no effect on reported net income or cash flow.
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 and Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that its goals will be achieved. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While Anadarko makes these forward-looking statements in good faith, neither Anadarko nor its management can guarantee that the anticipated future results will be achieved. Anadarko discloses proved reserves that comply with the Securities and Exchange Commission's (SEC) definitions. Additionally, Anadarko may disclose estimated recoverable reserves, which the SEC guidelines do not allow us to include in filings with the SEC. See Additional Factors Affecting Business in the Management's Discussion and Analysis included in the compa ny's 2001 Annual Report on Form 10-K.
EARNINGS CONFERENCE CALL TODAY AT 11 A.M. CST, 12 P.M. EST
Anadarko will host an earnings conference call today at 11 a.m. Central Standard Time (12 p.m. Eastern Standard Time) to discuss 2002 results and the company's outlook for 2003. The dial-in number is 913/981-4900, and the confirmation number is 717731. For complete instructions on how to participate in the conference call, visit our website at www.anadarko.com. A comprehensive report highlighting Anadarko's fourth quarter and full year of operations for 2002 will be available later this morning on the Investor Relations page.
Anadarko Petroleum Corporation
Quarter Ended Year Ended
Summary Financial Information (a) December 31 December 31
--------------- ----------------
$ and shares in millions 2002 2001 2002 2001
- ----------------------------------------------------------------------
Revenues
- ----------------------------------------------------------------------
Gas sales $541 $451 $1,835 $2,952
Oil and condensate sales 484 268 1,690 1,397
Natural gas liquids sales 66 46 222 256
Other sales 26 33 113 113
- ----------------------------------------------------------------------
Total 1,117 798 3,860 4,718
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Costs and Expenses
- ----------------------------------------------------------------------
Operating expenses 192 197 747 769
Administrative and general 87 67 314 247
Depreciation, depletion and
amortization 292 255 1,121 1,154
Other taxes 46 44 214 247
Impairments related to oil and gas
properties 6 3 39 2,546
Amortization of goodwill - 16 - 73
- ----------------------------------------------------------------------
Total 623 582 2,435 5,036
- ----------------------------------------------------------------------
Operating Income (Loss) 494 216 1,425 (318)
- ----------------------------------------------------------------------
Other (Income) Expense
- ----------------------------------------------------------------------
Merger expenses - 9 - 45
Interest expense 57 27 203 92
Other (income) expense 4 26 15 (65)
- ----------------------------------------------------------------------
Total 61 62 218 72
- ----------------------------------------------------------------------
Income (Loss) before Income Taxes 433 154 1,207 (390)
- ----------------------------------------------------------------------
Income Taxes
- ----------------------------------------------------------------------
Income taxes 122 45 376 (183)
Effect of change in Canadian income
tax rate - - - (31)
- ----------------------------------------------------------------------
Total 122 45 376 (214)
- ----------------------------------------------------------------------
Net Income (Loss) Before Cumulative
Effect of Change in
Accounting Principle $311 $109 $831 $(176)
- ----------------------------------------------------------------------
Preferred Stock Dividends 2 1 6 7
- ----------------------------------------------------------------------
Net Income (Loss) Available to Common
Stockholders Before Cumulative Effect
of Change in Accounting Principle $309 $108 $825 $(183)
- ----------------------------------------------------------------------
Cumulative Effect of Change in
Accounting Principle - - - 5
- ----------------------------------------------------------------------
Net Income (Loss) Available to Common
Stockholders $309 $108 $825 $(188)
- ----------------------------------------------------------------------
Per Common Share
- ----------------------------------------------------------------------
Net income (loss) - before change in
accounting principle - basic $1.25 $0.43 $3.32 $(0.73)
Net income (loss) - before change in
accounting principle - diluted $1.21 $0.41 $3.21 $(0.73)
Change in accounting principle -
basic $- $- $- $(0.02)
Change in accounting principle -
diluted $- $- $- $(0.02)
Net income (loss) - basic $1.25 $0.43 $3.32 $(0.75)
Net income (loss) - diluted $1.21 $0.41 $3.21 $(0.75)
Dividends $0.10 $0.075 $0.325 $0.225
- ----------------------------------------------------------------------
Average Number of Common Shares
Outstanding - Basic 249 249 248 250
- ----------------------------------------------------------------------
Average Number of Common Shares
Outstanding - Diluted 258 266 260 250
- ----------------------------------------------------------------------
(a) Net loss for the year ended December 31, 2001 reflects a change in
accounting principle related to accounting for derivative
instruments and hedging activities.
In accordance with EITF 02-3 adopted in the third quarter 2002,
marketing revenues and purchases are presented net within
revenues. The marketing margin related to Anadarko's equity
production is included in gas sales, oil sales and natural gas
liquids sales. The marketing margin related to purchases of third
party commodities is included in other sales. Prior period results
have been reclassified to conform to the current presentation.
Anadarko Petroleum Corporation
Quarter Ended Year Ended
Summary Financial Information December 31 December 31
------------- -----------------
$ in millions 2002 2001 2002 2001
- ----------------------------------------------------------------------
Cash Flow from Operations before
Changes in Assets and Liabilities
- ----------------------------------------------------------------------
Net income (loss) before cumulative
effect of change in accounting
principle $311 $109 $831 $(176)
Depreciation, depletion and
amortization 292 255 1,121 1,154
Amortization of goodwill - 16 - 73
Amortization of restricted stock 3 - 13 1
Non-cash merger expenses - 4 - 15
Interest expense - zero coupon
debentures 3 4 13 13
Deferred income taxes 98 93 214 (319)
Impairments related to oil and gas
properties 6 3 39 2,546
Other non-cash items - 44 (19) 122
- ----------------------------------------------------------------------
Total $713 $528 $2,212 $3,429
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Capital Expenditures
- ----------------------------------------------------------------------
Capital spending $476 $958 $2,037 $2,929
Capitalized interest 34 53 155 209
Capitalized overhead 48 52 196 178
- ----------------------------------------------------------------------
Total $558 $1,063 $2,388 $3,316
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Condensed Balance Sheet
- ----------------------------------------------------------------------
Current assets $1,280 $1,201
Net properties and equipment 15,098 13,637
Other assets 436 503
Goodwill 1,434 1,430
- ----------------------------------------------------------------------
Total Assets $18,248 $16,771
- ----------------------------------------------------------------------
Current liabilities $1,861 $1,801
Long-term debt 5,171 4,638
Other long-term liabilities 4,244 3,967
Stockholders' equity 6,972 6,365
Commitments and contingencies - -
- ----------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity $18,248 $16,771
- ----------------------------------------------------------------------
Capitalization
- ----------------------------------------------------------------------
Total debt $5,471 $5,050
Stockholders' equity 6,972 6,365
- ----------------------------------------------------------------------
Total $12,443 $11,415
- ----------------------------------------------------------------------
Capitalization Ratios
- ----------------------------------------------------------------------
Total debt 44% 44%
Stockholders' equity 56% 56%
- ----------------------------------------------------------------------
Anadarko Petroleum Corporation
Quarter Ended Year Ended
Volumes and Prices(a) December 31 December 31
--------------- ---------------
2002 2001 2002 2001
- ---------------------------------------------------------------------
Natural Gas
- ---------------------------------------------------------------------
United States
- ---------------------------------------------------------------------
Volumes, billion cubic feet 119 139 507 573
Average daily volumes, million cubic
feet per day 1,295 1,514 1,390 1,569
Price per thousand cubic feet $3.48 $2.52 $2.84 $4.23
- ---------------------------------------------------------------------
Canada
- ---------------------------------------------------------------------
Volumes, billion cubic feet 36 32 135 121
Average daily volumes, million cubic
feet per day 387 347 370 331
Price per thousand cubic feet $3.57 $3.09 $2.93 $4.38
- ---------------------------------------------------------------------
Other International
- ---------------------------------------------------------------------
Volumes, billion cubic feet - - - 1
Average daily volumes, million cubic
feet per day - 2 - 4
Price per thousand cubic feet $- $1.08 $- $1.22
- ---------------------------------------------------------------------
Total
- ---------------------------------------------------------------------
Volumes, billion cubic feet 155 171 642 695
Average daily volumes, million cubic
feet per day 1,682 1,863 1,760 1,904
Price per thousand cubic feet $3.50 $2.63 $2.86 $4.25
- ---------------------------------------------------------------------
Crude Oil and Condensate
- ---------------------------------------------------------------------
United States
- ---------------------------------------------------------------------
Volumes, million barrels 8 8 31 34
Average daily volumes, thousand
barrels per day 84 92 85 93
Price per barrel $25.03 $17.92 $23.07 $23.08
- ---------------------------------------------------------------------
Canada
- ---------------------------------------------------------------------
Volumes, million barrels 2 3 12 13
Average daily volumes, thousand
barrels per day 19 35 33 35
Price per barrel $20.86 $14.36 $19.31 $18.18
- ---------------------------------------------------------------------
Algeria
- ---------------------------------------------------------------------
Volumes, million barrels 8 2 24 8
Average daily volumes, thousand
barrels per day 87 19 65 22
Price per barrel $25.99 $20.35 $24.38 $23.97
- ---------------------------------------------------------------------
Other International
- ---------------------------------------------------------------------
Volumes, million barrels 2 3 8 13
Average daily volumes, thousand
barrels per day 24 29 22 36
Price per barrel $21.50 $13.01 $19.92 $14.35
- ---------------------------------------------------------------------
Total
- ---------------------------------------------------------------------
Volumes, million barrels 20 16 75 68
Average daily volumes, thousand
barrels per day 214 175 205 186
Price per barrel $24.67 $16.64 $22.55 $20.56
- ---------------------------------------------------------------------
Natural Gas Liquids
- ---------------------------------------------------------------------
Total
- ---------------------------------------------------------------------
Volumes, million barrels 4 4 15 15
Average daily volumes, thousand
barrels per day 41 44 41 42
Price per barrel $17.47 $11.50 $14.80 $16.55
- ---------------------------------------------------------------------
Total Barrels of Oil Equivalent (BOE)
- ---------------------------------------------------------------------
Volumes, million BOE 49 49 197 199
Average daily volumes, thousand BOE
per day 535 529 539 546
- ---------------------------------------------------------------------
(a) In accordance with EITF 02-3 adopted in the third quarter of 2002,
the marketing margin related to Anadarko's equity production is
included in gas sales, oil sales and natural gas liquids sales and
is reflected in the sales prices shown above. Prior period results
have been reclassified to conform to the current presentation.
Anadarko Petroleum Corporation
Oil and Gas Reserves
Total
(MMBOE)
------------------------------------
Other
U.S. Canada Algeria Int'l Total
---------------------------------------------------------------------
Proved Reserves
---------------------------------------------------------------------
December 31, 2001 1,415 315 387 188 2,305
---------------------------------------------------------------------
Revisions of prior estimates 46 (23) 5 (51) (23)
Extensions, discoveries and other
additions 124 59 3 - 186
Improved recovery 8 - - - 8
Purchases in place 74 - - 13 87
Sales in place (11) (28) - - (39)
Production (130) (35) (23) (8) (196)
---------------------------------------------------------------------
December 31, 2002 1,526 288 372 142 2,328
---------------------------------------------------------------------
---------------------------------------------------------------------
Proved Developed Reserves
---------------------------------------------------------------------
December 31, 2001 1,029 250 154 72 1,505
December 31, 2002 1,093 212 191 72 1,568
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Natural Gas
(Bcf)
------------------------------------
Other
U.S. Canada Algeria Int'l Total
---------------------------------------------------------------------
Proved Reserves
---------------------------------------------------------------------
December 31, 2001 5,648 1,241 - 146 7,035
---------------------------------------------------------------------
Revisions of prior estimates 78 (42) - (2) 34
Extensions, discoveries and other
additions 445 303 - - 748
Improved recovery (6) - - - (6)
Purchases in place 86 1 - - 87
Sales in place (53) (25) - - (78)
Production (505) (135) - - (640)
---------------------------------------------------------------------
December 31, 2002 5,693 1,343 - 144 7,180
---------------------------------------------------------------------
---------------------------------------------------------------------
Proved Developed Reserves
---------------------------------------------------------------------
December 31, 2001 4,247 1,028 - - 5,275
December 31, 2002 4,299 995 - - 5,294
---------------------------------------------------------------------
Oil, Condensate and NGLs
(MMBbls)
------------------------------------
Other
U.S. Canada Algeria Int'l Total
---------------------------------------------------------------------
Proved Reserves
---------------------------------------------------------------------
December 31, 2001 473 108 387 164 1,132
---------------------------------------------------------------------
Revisions of prior estimates 33 (15) 5 (52) (29)
Extensions, discoveries and other
additions 51 8 3 - 62
Improved recovery 8 - - - 8
Purchases in place 60 - - 13 73
Sales in place (2) (24) - - (26)
Production (45) (13) (23) (8) (89)
---------------------------------------------------------------------
December 31, 2002 578 64 372 117 1,131
---------------------------------------------------------------------
---------------------------------------------------------------------
Proved Developed Reserves
---------------------------------------------------------------------
December 31, 2001 321 79 154 72 626
December 31, 2002 377 46 191 72 686
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Anadarko Petroleum Corporation
Costs Incurred in Oil & Gas Producing Activities
millions 2002
- ----------------------------------------------------------------------
United States - Capitalized
Property acquisition
Exploration $341
Development 248
Exploration 654
Development 715
- ----------------------------------------------------------------------
Total United States 1,958
- ----------------------------------------------------------------------
Canada - Capitalized
Property acquisition
Exploration 25
Development 3
Exploration 138
Development 237
- ----------------------------------------------------------------------
Total Canada 403
- ----------------------------------------------------------------------
Algeria - Capitalized
Exploration 15
Development 140
- ----------------------------------------------------------------------
Total Algeria 155
- ----------------------------------------------------------------------
Other International - Capitalized
Property acquisition
Exploration 11
Development 26
Exploration 54
Development 108
- ----------------------------------------------------------------------
Total Other International 199
- ----------------------------------------------------------------------
Total - Capitalized
Property acquisition
Exploration 377
Development 277
Exploration 861
Development 1,200
- ----------------------------------------------------------------------
Total $2,715
- ----------------------------------------------------------------------
Contact:
Anadarko Petroleum, Houston
Media Contacts:
Teresa Wong, 832/636-1203
teresa_wong@anadarko.com
or
Anne Vincent, 832/636-8368
anne_vincent@anadarko.com
or
Investor Contacts:
Paul Taylor, 832/636-3471
paul_taylor@anadarko.com
or
David Larson, 832/636-3265
david_larson@anadarko.com
or
Stewart Lawrence, 832/636-3326
stewart_lawrence@anadarko.comSource: Anadarko Petroleum