Exhibit 99
Anadarko Updates Guidance for Production & Earnings
HOUSTON--(BUSINESS WIRE)--June 5, 2003--
-- VOLUME FORECAST LOWERED
-- EARNINGS GUIDANCE RAISED
Anadarko Petroleum Corporation (NYSE:APC) today lowered its 2003
targets for crude oil and natural gas sales based on development
drilling results and production issues. Anadarko also increased
earnings guidance for the second quarter of 2003 and full year due to
higher commodity prices, which more than offset the lower volumes.
Revised Production Guidance
Oil and gas sales volumes for 2003 are now expected to be 190
million barrels of oil equivalent (BOE), including 46 million BOE for
the second quarter, down from the previous forecast of 200 million BOE
and 48 million BOE, respectively.
"Production problems in three areas -- the Gulf of Mexico, Algeria
and Qatar -- require that we revise our production volume expectations
at this point," said Robert J. Allison, Jr., chairman, president and
CEO of Anadarko.
"Because Anadarko has a broad portfolio of producing fields and
development projects, we are usually able to offset downside
performance with upside production from other fields. Production in
other areas is on target or ahead of forecast this year, but
unfortunately the magnitude of the shortfalls, particularly in the
Gulf of Mexico, is too large to offset," Allison said.
"While we believe the shortfalls in Algeria and Qatar are
temporary, the production issues in the Gulf of Mexico will affect us
next year as well. We are still targeting strong production growth in
2004, but we recognize that earnings and returns matter as much as
volume targets. Lately, we've seen some property acquisitions that
offer better returns for our shareholders, so we may choose to add
projects to our portfolio that would let us achieve our target."
The following table provides the geographic breakout of this
revised volume forecast:
Previous 2003 Revised 2003
(million BOE) Forecast Forecast
U.S. Onshore 112 112
U.S. Offshore 22 17
Canada 33 33
Algeria 23 20
Other International 10 8
Total 200 190
Gulf of Mexico
The company is experiencing lower-than-expected production,
primarily due to performance from three fields in the Gulf of Mexico
- -- Hickory, Tanzanite and Pardner.
In the Hickory and Tanzanite fields, natural gas production
dropped unexpectedly from two high-volume wells due to downhole
mechanical failures. Following recompletion of the Hickory well to a
higher zone, production was restored at lower rates. Meanwhile, the
company opted to produce two new wells in these fields from zones that
are deeper than the initial targets in order to maximize recoveries.
This has delayed production from the original target zones. These
zones are expected to produce at higher rates. The company expects
that reserve estimates for these fields will not be significantly
affected by these issues.
Also, the company's Pardner field recently came on production at
rates much lower than anticipated. Technical studies are under way to
understand why the well is not producing as expected and to determine
if a repair can be made to increase the volumes.
Algeria
Despite early production from the Ourhoud field, Anadarko's net
oil sales volumes for the year are expected to be below the company's
previous forecast as a result of delays in several pipeline projects
that are currently under construction. Daily production close to
target levels has been achieved for short periods this year,
indicating some progress has been made with these projects. These
pipeline projects are expected to be completed later this year.
Qatar
Start-up delays mainly due to weather will reduce expected volumes
for the second quarter of 2003 and the full year. Following the
installation of a new production facility, the Al Rayyan field was
restarted in May and is currently producing more than 20,000 barrels
of oil a day (gross). Production is expected to end the year at 25,000
barrels a day, rather than 35,000 barrels a day previously forecast,
as a result of delayed drilling of additional development wells and
production limitations.
Revised Earnings Guidance
Anadarko expects current commodity prices for oil and gas to more
than offset the effect of the reduced sales volumes. As a result, 2003
earnings and cash flow are now expected to be higher than the
company's previous guidance.
Anadarko expects to earn $311 million, or $1.24 per share
(diluted) for the second quarter of 2003, with expected cash flow from
operating activities of $740 million. That compares with the previous
estimates of $1.15 per share (diluted) of earnings and cash flow from
operating activities of $710 million. The expected average number of
diluted shares outstanding is 252 million.
For the full year, the company expects earnings of about $1.46
billion, or $5.77 per share (diluted), and cash flow from operating
activities of about $3.24 billion. That compares with the previous
estimates of $1.39 billion, or $5.51 per share (diluted) of earnings
and cash flow from operating activities of $3.16 billion. The expected
average number of diluted shares outstanding is 253 million.
Anadarko's revised 2003 estimates assume average NYMEX oil prices
of $28.75 per barrel for the second quarter, with a full-year average
price of $29.25 per barrel. The company's NYMEX natural gas price
estimate is $5.40 per thousand cubic feet (Mcf) for the second
quarter, with a full-year average price of $6 per Mcf. These prices
are somewhat lower than recent published prices. See the attached
financial tables for price and volume assumptions.
Capital Program
"Based on these prices and our current $2.5 billion capital
budget, we expect to have about $600 million of free cash flow, after
dividends," Allison said. "We plan to spend just over $200 million on
a property acquisition that will be announced shortly, which will add
production and cash flow this year and has excellent payout and
margins. These volumes are not included in the new guidance.
"We also plan to reduce debt by at least $300 million this year,
and we will consider additional debt retirement and share repurchases
with the remaining cash flow.
"Increased drilling activity and additional property acquisitions
also remain options," he noted, "but we are not quite ready to commit
additional capital this year. We are going to remain disciplined on
both sides of the ball, investing wisely while managing costs
prudently."
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, Qatar
and Venezuela and is executing strategic exploration programs in
several other countries. More information is available at
www.anadarko.com.
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
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 company's 2002
Annual Report on Form 10-K.
Anadarko Petroleum Corporation
Second Quarter 2003
Financial Model - Guidance
1st Quarter 2nd Quarter Total Year
Actuals Forecast Forecast
------------------ --------------- -----------------
$MM $/Share $MM $/Share $MM $/Share
-------- --------- ------- ------- -------- --------
Net Income $418 $1.63 $311 $1.24 $1,460 $5.77
Cash Flow from
Operating
Activities $705 $740 $3,243
- ----------------------------------------------------------------------
Price Deck (NYMEX) ($/Unit) ($/Unit) ($/Unit)
Crude Oil ($/Bbl) $33.87 $28.75 $29.25
Natural Gas ($/Mcf) $6.59 $5.40 $6.00
Natural Gas Liquids
(% of NYMEX Oil) 68% 72% 75%
- ----------------------------------------------------------------------
Price Price Price
Differ- Differ- Differ-
ential ential ential
Volumes ($/Unit) Volumes ($/Unit) Volumes ($/Unit)
------- --------- -------- -------- --------- --------
Total Sales
(MMBoe) 45 46 190
Crude Oil
(MBbl/d): 173 $(5.28) 176 $(3.36) 187 $(4.00)
United States 92 $(6.03) 94 $(3.28) 92 $(4.10)
Canada 17 $(6.46) 16 $(1.58) 16 $(3.17)
Algeria 48 $(2.05) 53 $(2.73) 56 $(2.46)
Other
International 16 $(9.36) 13 $(8.43) 23 $(7.93)
Natural Gas
(MMcf/d): 1,705 $(1.98) 1,757 $(0.87) 1,774 $(1.26)
United States 1,316 $(2.09) 1,356 $(0.92) 1,350 $(1.32)
Canada 389 $(1.60) 401 $(0.71) 424 $(1.10)
Natural Gas Liquids
(MBbl/d): 41 38 38
United States 39 36 36
Canada 2 2 2
- ----------------------------------------------------------------------
$MM $MM $MM
-------- -------- --------
Other Revenues:
Marketing Margin
(Sales - Costs) $3 $14 $46
Minerals and
Other $16 $19 $65
$MM $/Boe $MM $/Boe $MM $/Boe
-------- -------- ------- -------- ------- --------
Costs and
Expenses:
Operating Costs $176 $3.94 $198 $4.30 $792 $4.17
Administrative
and General $88 $88 $341
Depreciation,
Depletion and
Amortization $290 $6.49 $308 $6.67 $1,264 $6.65
Impairments of
Oil and Gas
Properties $5 $- $50
Production and
Other Taxes (%
of Rev) $75 5.9% $73 6.1% $286 5.6%
- ----------------------------------------------------------------------
$MM $MM $MM
-------- -------- --------
Other Items:
Interest
Expense (a) $60 $63 $235
Other (Income)
Expense $(37) $10 $(12)
- ----------------------------------------------------------------------
Federal Tax Rate 38% 37% 37%
Deferred Taxes
(% of Total
Taxes) 66% 64% 63%
- ----------------------------------------------------------------------
Average Shares Outstanding
(MM)
Basic 249 249 249
Diluted 258 252 253
- ----------------------------------------------------------------------
Capital Investment
Program $623 $716 $2,500
Capital Budget
(Estimated) $537 $636 $2,169
Capitalized
Direct Expenses $52 $47 $199
Capitalized
Interest $34 $33 $132
(a) Interest expense for the second quarter and full year includes $8
million of accelerated debt issuance cost amortization associated
with the redemption of the convertible debentures in April.
CONTACT: Anadarko Petroleum Corporation
Media Contacts:
Anne Vincent, 832/636-8368
anne_vincent@anadarko.com
or
Lee Warren, 832/636-3221
lee_warren@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.com