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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: September 30, 1995
Commission File Number: 1-8968
_____________________
ANADARKO PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0146568
(State of incorporation) (I.R.S. Employer
Identification No.)
17001 NORTHCHASE DRIVE, HOUSTON, TEXAS 77060
(Address of executive offices)
(713) 875-1101
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the registrant's classes of
common stock as of October 31, 1995 is shown below:
Number of Shares
Title of Class Outstanding
Common Stock, $0.10 par value 58,987,099
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
thousands 1995 1994 1995 1994
Revenues
Gas sales $60,256 $ 67,083 $188,111 $243,519
Oil and condensate sales 30,066 34,753 95,453 93,935
Natural gas liquids and other 8,961 10,675 32,436 29,748
Total 99,283 112,511 316,000 367,202
Cost and Expenses
Operating expenses 26,146 25,283 78,312 80,989
Administrative and general 13,099 15,339 42,021 45,222
Depreciation, depletion and
amortization 42,718 40,807 121,552 131,490
Other taxes 8,535 10,195 28,721 31,982
Provisions for impairments of
international properties 250 --- 250 ---
Total 90,748 91,624 270,856 289,683
Operating Income 8,535 20,887 45,144 77,519
Other Income 260 698 532 1,873
Gross Income 8,795 21,585 45,676 79,392
Interest Expense 9,247 7,126 26,271 20,843
Income (Loss) before Income Taxes (452) 14,459 19,405 58,549
Income taxes (1,559) 4,154 5,165 19,499
Net Income $ 1,107 $ 10,305 $ 14,240 $ 39,050
Per Common Share
Net income $ 0.02 $ 0.18 $ 0.24 $ 0.66
Dividends $ 0.075 $ 0.075 $ 0.225 $ 0.225
Average Number of Shares Outstanding 58,949 58,802 58,913 58,752
See accompanying notes to consolidated financial statements.
-2-
Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, December 31,
thousands 1995 1994
ASSETS
Current Assets
Cash and cash equivalents $ 7,763 $ 6,530
Accounts receivable 83,879 115,181
Inventories, at average cost 14,593 13,420
Prepaid expenses 3,964 3,496
Total 110,199 138,627
Properties and Equipment
Original cost 3,561,000 3,446,252
Less accumulated depreciation, depletion
and amortization 1,531,145 1,460,196
Net properties and equipment - based on
the full cost method of accounting
for oil and gas properties 2,029,855 1,986,056
Deferred Charges 11,772 17,418
$2,151,826 $2,142,101
See accompanying notes to consolidated financial statements.
-3-
Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEET (continued)
(Unaudited)
September 30, December 31,
thousands 1995 1994
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts payable
Trade and other $ 60,461 $ 95,829
Banks 5,719 14,287
Accrued expenses
Interest 8,112 7,676
Taxes and other 17,467 10,359
Total 91,759 128,151
Long-term Debt 669,076 629,281
Deferred Credits
Deferred income taxes 443,238 438,684
Other 41,875 46,386
Total 485,113 485,070
Stockholders' Equity
Common stock, par value $0.10
(200,000,000 shares authorized,
58,982,497 and 58,857,290 shares issued
and outstanding as of September 30, 1995
and December 31, 1994, respectively) 6,043 5,931
Preferred stock, par value $1.00
(2,000,000 shares authorized, no
shares issued as of September 30, 1995
and December 31, 1994) --- ---
Paid-in capital 295,981 243,976
Retained earnings (as of September 30, 1995,
$255,878,000 was not restricted
as to the payment of dividends) 653,938 653,112
Deferred compensation (2,709) (3,420)
Executives and directors benefits trust,
at market value (1,000,000 shares as of
September 30, 1995) (47,375) ---
Total 905,878 899,599
$2,151,826 $2,142,101
See accompanying notes to consolidated financial statements.
-4-
Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
thousands 1995 1994
Cash Flow from Operating Activities
Net income $ 14,240 $ 39,050
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation, depletion and amortization 121,552 131,490
Provision for impairment of
international properties 250 ---
Amortization of restricted stock 1,237 900
Deferred income taxes 5,006 17,386
142,285 188,826
Decrease in accounts receivable 31,302 20,677
Increase in inventories (1,173) (4,209)
Increase (decrease) in accounts payable -
other and accrued expenses (27,824) 5,649
Other items - net 611 1,857
Net cash from operating activities 145,201 212,800
Cash Flow from Investing Activities
Additions to properties and equipment (173,917) (337,617)
Sales and retirements of properties and equipment 7,920 59,144
Net cash used in investing activities (165,997) (278,473)
Cash Flow from Financing Activities
Additions to debt 213,100 113,076
Retirements of debt (173,305) ---
Increase (decrease) in accounts payable, banks (8,568) 343
Dividends paid (13,414) (13,222)
Issuance of common stock 4,216 3,844
Issuance of treasury stock 374 316
Purchase of treasury stock (374) (355)
Net cash from financing activities 22,029 104,002
Effect of Exchange Rate Changes on Cash --- (246)
Net Increase in Cash and Cash Equivalents 1,233 38,083
Cash and Cash Equivalents at Beginning of Period 6,530 17,799
Cash and Cash Equivalents at End of Period $ 7,763 $ 55,882
See accompanying notes to consolidated financial statements.
-5-
Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Summary of Accounting Policies Anadarko Petroleum Corporation is engaged
in the exploration, development, production and marketing of gas, oil and
natural gas liquids (NGLs). The terms "Anadarko" and "Company" refer to
Anadarko Petroleum Corporation and its subsidiaries. The principal
subsidiaries of Anadarko are Anadarko Gathering Company, Anadarko Trading
Company and Anadarko Algeria Corporation. In December 1994, the Company
sold its wholly-owned subsidiary Anadarko Petroleum of Canada Ltd.
Certain amounts for prior years have been reclassified to conform to the
current presentation.
2.Inventories Inventories are stated at the lower of average cost or market.
NGLs and natural gas, when sold from inventory, are charged to expense using
the average-cost method. The major classes of inventories are as follows:
September 30, December 31,
thousands 1995 1994
Materials and supplies $12,895 $11,953
Natural gas liquids, stored in inventory 1,510 842
Natural gas, stored in inventory 188 625
$14,593 $13,420
3.Properties and Equipment Oil and gas properties include costs of
$226,238,000 and $270,956,000 at September 30, 1995 and December 31, 1994,
respectively, which were excluded from capitalized costs being amortized.
These amounts represent costs associated with unevaluated properties and
major development projects.
During the third quarter of 1995, the Company made provisions for impair-
ments of international properties of $250,000, which were related to oil
and gas properties. These impairments related to unsuccessful activities
in various international locations.
4.Long-term Debt A summary of long-term debt follows:
September 30, December 31,
thousands 1995 1994
Notes Payable, Banks $162,100 $ 49,000
Commercial Paper 6,976 180,281
8 3/4% Notes due 1998 100,000 100,000
8 1/4% Notes due 2001 100,000 100,000
6 3/4% Notes due 2003 100,000 100,000
5 7/8% Notes due 2003 100,000 100,000
7 1/4% Debentures due 2025 100,000 ---
$669,076 $629,281
-6-
Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Long-term Debt (continued)
In March 1995, Anadarko issued $100,000,000 principal amount of 7 1/4%
Debentures due 2025. Each Debenture holder has the one-time right to have
the Company purchase on March 15, 2000, all or a portion of, the Debenture
at a purchase price equal to par plus accrued and unpaid interest. Net
proceeds from the offering were used to fix existing floating interest rate
debt.
The notes payable to banks and commercial paper have been classified as
long-term debt in accordance with Statement of Financial Accounting
Standards No. 6, "Classification of Short-term Obligations Expected to be
Refinanced", under the terms of Anadarko's Bank Credit Agreements.
5. Stock In May 1995, the Company issued 1,000,000 shares of common stock
to the Anadarko Petroleum Corporation Executives and Directors Benefits
Trust (Trust) to secure present and future unfunded benefit obligations of
the Company. The shares issued to the Trust are not considered outstanding
for quorum or voting calculations, but the Trust will receive dividends.
The shares are included in the calculation of earnings per share under the
treasury stock method and have no dilutive effect. The fair market value
of these shares is included in common stock and paid-in capital and as a
reduction to stockholders' equity. As of September 30, 1995, there were
1,000,000 shares in the Trust.
For the third quarter of 1995, dividends of seven and one-half cents per
share were paid to holders of common stock. Under the most restrictive
provisions of the various credit agreements, which limit the payment of
dividends by the Company, retained earnings of $255,878,000 and $249,599,000
were not restricted as to the payment of dividends at September 30, 1995 and
December 31, 1994, respectively.
6. Statement of Cash Flows Supplemental Information The amounts of cash
paid for interest (net of amounts capitalized) and income taxes are as
follows:
Nine Months Ended
September 30
thousands 1995 1994
Interest $23,439 $18,586
Income taxes $ 1,008 $ 451
-7-
Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Operating Expenses Operating expenses by category are as follows:
Three Months Ended Nine Months Ended
September 30 September 30
thousands 1995 1994 1995 1994
Oil and gas $18,127 $16,447 $50,475 $52,087
Plant and gathering 5,772 5,511 19,380 17,263
Gas purchases 2,151 3,059 7,014 11,157
Other 96 266 1,443 482
Total $26,146 $25,283 $78,312 $80,989
8. Income Taxes Financial results in the third quarter of 1995 benefited
from lower income taxes, primarily due to Section 29 credits, following
final reconciliation of the Company's 1994 taxes.
9. The information as furnished reflects all normal recurring adjustments that
are, in the opinion of management, necessary to a fair statement of
financial position as of September 30, 1995 and December 31, 1994, the
results of operations for the three and nine months ended September 30, 1995
and 1994, and cash flows for the nine months ended September 30, 1995 and
1994.
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview of Operating Results
For the third quarter of 1995, Anadarko's net income was $1.1 million (two
cents per share of common stock outstanding) compared to net income of $10.3
million (18 cents per share) for the third quarter of 1994. Revenues for the
third quarter of 1995 were $99.3 million, down 12 percent compared to $112.5
million for the third quarter of 1994. Financial results in the third
quarter of 1995 benefited from lower income taxes, primarily due to Section
29 tax credits, following final reconciliation of the Company's 1994 taxes.
The significant decrease in net income and revenues is due primarily to
sharply lower natural gas prices and lower volumes and prices of crude oil.
For the first nine months of 1995, Anadarko's net income was $14.2 million (24
cents per share). This compares to net income of $39.1 million (66 cents per
share) for the same period of 1994. Revenues for the first nine months of 1995
were $316 million, a decrease of 14 percent compared to $367.2 million for the
same period of 1994. The decline in net income and revenues is due primarily
to lower prices and production for natural gas and lower production volumes of
crude oil in 1995.
The following table shows the Company's volumes and U.S. prices for the three
and nine months ended September 30, 1995 and 1994:
Three Months Ended
September 30 % Increase
1995 1994 (Decrease)
Natural gas, million cubic feet 42,301 40,925 3
Price per thousand cubic feet $ 1.27 $ 1.59 (20)
Crude oil and condensate,
thousand barrels 1,820 2,066 (12)
Price per barrel $ 15.94 $ 16.55 (4)
Natural gas liquids,
thousand barrels 658 786 (16)
Price per gallon $ 0.30 $ 0.31 (3)
-9-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Nine Months Ended
September 30 % Increase
1995 1994 (Decrease)
Natural gas, million cubic feet 127,167 132,110 (4)
Price per thousand cubic feet $ 1.35 $ 1.80 (25)
Crude oil and condensate
thousand barrels 5,594 6,321 (12)
Price per barrel $ 16.63 $ 14.88 12
Natural gas liquids,
thousand barrels 2,426 2,431 --
Price per gallon $ 0.30 $ 0.28 7
See "Natural Gas Volumes, Prices and Markets" and "Crude Oil,
Condensate and Natural Gas Liquids Volumes and Prices".
Costs and expenses during the third quarter of 1995 were $90.7 million, a
decrease of one percent compared to $91.6 million for the third quarter of
1994. The decrease is primarily due to lower administrative and general
expenses and lower production taxes. These decreases were partially offset
by higher depreciation and oil and gas operating expenses.
For the first nine months of 1995, costs and expenses were $270.9 million, a
decrease of $18.8 million (six percent) compared to $289.7 million for the
first nine months of 1994. The decrease is related primarily to lower natural
gas and oil production volumes and lower natural gas prices, which resulted
in lower depreciation, depletion and amortization, production taxes and
operating expenses.
Interest expense for the third quarter of 1995 was $9.2 million, an increase
of 30 percent compared to $7.1 million for the third quarter of 1994. For the
first nine months of 1995, interest expense was $26.3 million, an increase of
26 percent compared to $20.8 million for the same period of 1994. The
increases in interest expense for both periods of 1995 are due primarily to
higher levels of borrowing and interest rates during 1995.
Natural Gas Volumes, Prices and Markets During the third quarter of 1995,
Anadarko produced 42.3 billion cubic feet (Bcf) or 460 million cubic feet per
day (MMcf/d) of natural gas, up three percent compared to 40.9 Bcf or 445
MMcf/d of gas in the third quarter of 1994. Anadarko's average U.S. gas price
during the third quarter of 1995 was $1.27 per thousand cubic feet (Mcf), a
20 percent decrease from $1.59 per Mcf in the third quarter of 1994.
For the first nine months of 1995, Anadarko produced 127.2 Bcf or 466 MMcf/d of
gas, down four percent compared to 132.1 Bcf or 484 MMcf/d of gas for the same
period of 1994. The Company's average U.S. gas price for the first nine months
of 1995 was $1.35 per Mcf, a 25 percent decrease from $1.80 per Mcf for the
same period of 1994.
-10-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Crude Oil, Condensate and Natural Gas Liquids Volumes and Prices Anadarko's
crude oil and condensate production for the third quarter of 1995 decreased 12
percent to 1.8 million barrels (MMBbls) or 19.8 thousand barrels of oil per
day (MBOPD) from 2.1 MMBbls or 22.5 MBOPD in the third quarter of 1994. The
decline is partially due to sales of producing properties in 1994. Anadarko's
average U.S. oil price decreased four percent to $15.94 per barrel in the third
quarter of 1995 compared to $16.55 per barrel for the same period in 1994.
For the first nine months of 1995, crude oil and condensate production was 5.6
MMBbls or 20.5 MBOPD, a decrease of 12 percent compared to 6.3 MMBbls or 23.2
MBOPD for the same period of 1994. The decline is partially due to sales of
producing properties in 1994. Anadarko's average U.S. oil price for the first
nine months of 1995 was $16.63 per barrel, an increase of 12 percent compared
to $14.88 per barrel for the same period of 1994.
Generally, the Company's oil and condensate production is sold on a monthly
basis as it is produced. Production of oil is usually not affected by
volatility in market prices.
Natural gas liquids (NGLs) sales volumes were down 16 percent to 658 thousand
barrels (MBbls) at an average price of 30 cents per gallon for the third
quarter of 1995. This compares to 786 MBbls at an average price of 31 cents
per gallon for the same period of 1994.
NGLs volumes for the first nine months of 1995 were flat at 2.4 MMBbls at an
average price of 30 cents per gallon compared to an average price of 28 cents
per gallon during the same period of 1994.
Hedging Strategies Anadarko uses financial instruments to limit exposure to
changes in the market price of natural gas and crude oil for both the Company
and its customers. While financial instruments are intended to reduce the
Company's exposure to declines in the market price of natural gas and crude
oil, the financial instruments may also limit Anadarko's gain from increases in
the market price of natural gas and crude oil. As a result, gains and losses
on financial instruments are generally offset by similar changes in the
realized price of natural gas and crude oil. Gains and losses are recognized
in revenues for the periods to which the financial instruments relate.
Anadarko's financial instruments currently are comprised of futures, swaps
and options.
Capital Expenditures, Liquidity and Dividends
During the first nine months of 1995, Anadarko's capital spending (including
capitalized interest and overhead) was $173.9 million compared to $337.2
million in the same period of 1994. Capital expenditures in both periods
related primarily to the Company's oil and gas exploration and development
activities. Capital expenditures for 1994 included $72 million for offshore
leases in the Gulf of Mexico that were acquired in March 1994. Investment
levels have also decreased for 1995 compared to 1994 due to lower prices for
natural gas in 1995.
-11-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Net cash from operating activities for the first nine months of 1995 was $145.2
million compared to $212.8 million in the same period of 1994. Sources of
funds for the Company's capital spending programs include: cash flows;
existing available credit facilities; and, proceeds from sales of properties,
where the Company may totally divest non-core properties or reduce
(sell-down) its interest in core properties. The Company believes these
sources will be sufficient to meet capital and operating requirements during
the remainder of 1995. In addition, the Company may pursue other financing
options to reduce or stabilize interest costs.
In March 1995, Anadarko issued $100 million principal amount of 7 1/4%
Debentures due 2025. Each Debenture holder has the one-time right to have the
Company purchase on March 15, 2000, all or a portion of, the Debenture at a
purchase price equal to par plus the accrued and unpaid interest. Net proceeds
from the offering were used to fix floating interest rate debt.
Anadarko's Board of Directors declared a quarterly dividend of seven and
one-half cents per share of common stock. The dividend is payable on
December 27, 1995 to stockholders of record on December 13, 1995. Under the
most restrictive provisions of the various credit agreements, which limit
the payment of dividends by the Company, retained earnings of $255.9 million
were not restricted as to the payment of dividends at September 30, 1995. The
amount of future dividends for Anadarko will depend on earnings, financial
condition, capital requirements and other factors, and will be determined by
the Directors on a quarterly basis.
In May 1995, the Company issued one million shares of common stock to the
Anadarko Petroleum Corporation Executives and Directors Benefits Trust (Trust)
to secure present and future unfunded benefit obligations of the Company. The
shares issued to the Trust are not considered outstanding for quorum or voting
calculations, but the Trust will receive dividends. The shares are included in
the calculation of earnings per share under the treasury stock method and have
no dilutive effect.
Exploration and Development Drilling
During the third quarter of 1995, Anadarko participated in a total of 46 wells,
including 12 oil wells, 28 gas wells and 6 dry holes. This compares to a total
of 66 wells, including 36 oil wells, 18 gas wells and 12 dry holes during the
third quarter of 1994. For the first nine months of 1995, Anadarko participated
in a total of 199 wells, including 91 oil wells, 80 gas wells and 28 dry holes.
This compares to a total of 194 wells, including 105 oil wells, 57 gas wells
and 32 dry holes during the first nine months of 1994.
-12-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
International
Algeria In October 1995, Anadarko and partners announced results from two
field delineation wells drilled recently in the Sahara Desert.
In the Hassi Berkine South area, the HBNS No. 2 well was drilled to a total
depth of 3,400 meters (11,155 feet) and encountered 6.5 meters (21 feet) of net
oil pay out of a 25 meter (82 feet) net Triassic sandstone. The HBNS No. 2
flowed at a stabilized rate of 3,631 barrels of oil per day (BOPD) and
3.9 MMcf/d through a 1/2 inch choke at 1,589 pounds per square inch (psi)
flowing tubing pressure. The well flowed 42 degree API gravity oil with no H2S,
CO2, or water and the gas/oil ratio was 1,081 standard cubic feet per barrel.
The HBNS No. 2 well confirmed the excellent quality and continuity of pay
sands across the HBNS structure at a location six kilometers (four miles)
southwest of the HBNS No. 1B well, which encountered 26 meters (85 feet) of
net pay and tested at 16,000 BOPD and 17.8 MMcf/d of gas earlier this year.
The No. 2 well established the oil/water contact for the HBNS structure.
Pressure tests confirm communication and reservoir continuity between the
HBNS No. 2 and HBNS No. 1B wells.
Just north of these wells, in the Hassi Berkine area, the HBN No. 4 delineation
well was drilled to a total depth of 3,425 meters (11,237 feet) at a location
5.5 kilometers (3.3 miles) from the discovery well. The HBN No. 4 well was
drilled structurally downdip to determine the limits of the field. The well
encountered about 20 meters (66 feet) of Triassic sands that were water
saturated. Although the well is a dry hole, it provides significant data for
field definition and reserves. The well will be cased and reserved for future
use as a potential injection well.
The partners and Sonatrach, the national oil and gas enterprise of Algeria,
through a joint committee are currently working to obtain technical data to
determine if HBN and HBNS are in the same field. The partners plan to drill two
more delineation wells in this area in late 1995 and early 1996. Data from
these wells will be incorporated in the development plans.
Since beginning their exploration program in the Ghadames and Illizi Basins of
Algeria in 1989, the partners have announced five discoveries. Delineation work
is underway to fully evaluate these discoveries. Based on preliminary
development studies and an estimated 246 million barrels of proved reserves
(gross), Anadarko has booked 65 million barrels (net) through May 1995.
Anadarko and partners are working with Sonatrach to bring the discoveries on
production on a staged basis. The partners have submitted draft documentation
with Sonatrach, and will apply for Provisional Exploitation Authorization (PEA)
for Stage I production from the HBN and HBNS wells. Under the terms of the PEA,
Stage I production of about 40,000 BOPD is anticipated to begin in late 1996.
Subsequently, the Partners will file formal applications (called the
Commerciality Reports) requesting Exploitation Licenses based on the existing
data and the results of the delineation wells that will be drilled in late 1995
and early 1996.
-13-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Initial production will be transported utilizing the existing pipeline network
immediately north of Block #404. In order to accommodate subsequent stages of
production from the Hassi Berkine area, as well as other fields to be developed
by the partners, Sonatrach is planning to construct a new 30-inch diameter
pipeline that would transport oil from Block #404 to their main oil terminal
facility at Haoud El Hamra, north of the giant Hassi Messaoud Oil Field. The
new pipeline is expected to be operational in 1997, and will have the
capacity to transport several hundred thousand barrels of oil per day.
Anadarko and partners expect to increase their activity level in Algeria over
the next few months. One drilling rig is operating in Algeria today and the
partners are in the process of contracting for two additional rigs. One of
these will be used in conjunction with the existing rig for exploration and
delineation of the oil fields discovered on Block #404 and on Block #208.
The other rig will be used to drill an exploration well on Block #245 -- the
southernmost block in the partners' exploration area -- beginning in the
fourth quarter of this year.
Anadarko's partners in the Algeria project are LASMO Oil (Algeria) Limited, a
wholly-owned subsidiary of LASMO plc, and Maersk Olie Algeriet AS, a wholly-
owned subsidiary of Maersk Olie Og Gas AS, a company in the Danish A.P.
Moeller group. Anadarko Algeria Corporation is the operator and has a
50-percent interest in the Production Sharing Agreement (PSA). LASMO and
Maersk Oil each have a 25-percent interest.
Under the terms of the PSA, liquid hydrocarbons that are discovered, developed
and produced will be shared by Sonatrach, Anadarko and its two partners.
Sonatrach is responsible for its share (51%) of development and operating
costs. Anadarko and its partners are also entitled to recover a portion of
exploration costs out of production.
Political unrest continues in Algeria. The Company is closely monitoring the
situation and has taken reasonable and prudent steps to insure the safety of
employees working in the remote regions of the Sahara Desert. Anadarko is
presently unable to predict with certainty any effect the current situation may
have on activity planned for the remainder of 1995 and beyond. However, the
situation has not had any material effect on the Company's operations.
Eritrea In September 1995, Anadarko signed a Production Sharing Contract
(PSC) with the State of Eritrea's Ministry of Energy, Mines and Water
Resources. The PSC was signed at a ceremony in Asmara, Eritrea, on the east
coast of Africa.
The PSC allows Anadarko Eritrea Company, a wholly-owned subsidiary, to explore
for oil and gas in a 6.7 million acre area named the Zula Block, offshore in
the Red Sea and adjacent to Yemen and Saudi Arabia. Anadarko is committed
to spend $8.5 million in the initial phase of exploration.
-14-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Review of existing seismic data indicates that much of the exploration area
contains structures associated with salt, and possibly salt sheets similar to
those found in the Gulf of Mexico. The Company will begin its initial
exploration program with high-density magnetic gravity surveys near the end of
this year.
Indonesia In August 1995, Anadarko and partners announced test results from
an exploratory well located on the Jabung Block in Indonesia. The N.E.
Betara #1 well encountered 130 feet of hydrocarbon bearing sands at depths of
4,908 - 5,164 feet. Tests of three intervals totaling 84 net feet of pay
flowed at combined rates of 420 barrels of condensate per day (BCPD) and 22
MMcf/d of gas, of which, 55 percent was carbon dioxide.
Santa Fe Energy Resources, Inc., the operator, and partners Anadarko and
Kerr-McGee Corporation plan to offset the well in early 1996 to further
evaluate gas reserves in place and to explore for possible downdip oil
reservoirs. Each partner holds a 33 percent working interest in the project.
United States
Texas Panhandle Eight wells were completed in the third quarter of 1995 in
the Red Cave Formation, located in Moore County Texas. Combined rates from the
eight completed wells was 4.2 MMcf/d of natural gas. Currently there are four
wells in completion and four additional wells planned for the remainder of
1995. Anadarko owns a 100 percent working interest in the wells.
West Texas Permian Basin In the Ketchum Mountain Field of Irion County,
Texas, the Scott "12" #1205 well was completed in the third quarter of 1995.
Initial production from the well was 229 BOPD and 158 thousand cubic feet per
day (Mcf/d) of gas. Anadarko owns a 100 percent working interest in the well.
Southwest Kansas In the Eubank Field of Haskell County, Kansas, three wells
were completed in the third quarter of 1995. Test results for the Tiller "A"
#1 well was 126 BOPD and 130 Mcf/d of gas. The Tiller "A" #2 well tested at
141 BOPD. The Owens "A" #1 well flowed 1.3 MMcf/d of gas and 28 BOPD through a
5/16 inch choke with flowing tubing pressure of 410 psi. This location was
identified by a 3-D seismic survey. Drilling continues in this field.
Anadarko owns a 100 percent working interest in the wells.
Located in the Angman Field of Seward County, the Santa Fe E-3 well was
completed. Initial test rates were 2.2 MMcf/d of gas and 40 BOPD with flowing
tubing pressure of 360 psi. Anadarko owns a 100 percent working interest in
the well.
In the Genzler SW Field of Stevens County, the Ratzlaff "B" #2 was completed in
the third quarter of 1995. Initial test rates were 1.6 MMcf/d of gas and 9
BCPD through a 19/64 inch choke with flowing tubing pressure of 1,035 psi.
Anadarko owns a 96.6 percent working interest in the well.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The Tucker "L" #1 well, located in the Wilburton N. Field of Morton County was
completed in the third quarter of 1995. The well tested at 966 Mcf/d on a 3/8
inch choke with flowing tubing pressure of 332 psi. Anadarko owns a 100
percent working interest in the well.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Heritage Resources, Inc. Litigation Pursuant to an order of the 162nd
Judicial District Court for Dallas County, Texas, dated January 29, 1988,
requiring all owners of interests in certain properties in Winkler County,
Texas, to be joined as parties Plaintiff or parties Defendant, Anadarko has
entered, as a party Plaintiff, a suit filed against Heritage Resources, Inc.
(Heritage) by Tribal Drilling Company. The Plaintiffs, among other things,
seek to have Heritage removed as operator of a well in which Plaintiffs own
interests. The Defendants have asserted counterclaims against Anadarko and
the 19 other Plaintiffs alleging that, among other things, the assertions of
the Plaintiffs are frivolous and were made in bad faith and the Plaintiffs
breached the joint operating agreements. The trial is scheduled to begin on
May 6, 1996. While the outcome of the litigation cannot be predicted,
Anadarko's management believes that any recovery on the counterclaims in a
material amount is remote.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K for the three months ended
September 30, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officer and principal financial officer.
ANADARKO PETROLEUM CORPORATION
(Registrant)
November 10, 1995 [MICHAEL E. ROSE]
Michael E. Rose - Senior Vice President,
Finance and Chief Financial Officer