Exhibit 99.1
Anadarko Announces 2005 Budget
HOUSTON--(BUSINESS WIRE)--Nov. 19, 2004--Anadarko Petroleum
Corporation (NYSE:APC)
-- ANTICIPATE 7-11% VOLUME GROWTH IN 2005
-- CAPITAL EXPENDITURES OF $2.9 BILLION - $3.1 BILLION
-- INCREASE IN EXPLORATION SPENDING TO SUSTAIN GROWTH
Anadarko Petroleum Corporation (NYSE:APC) announced today that its
Board of Directors has approved a 2005 budget in the range of $2.9
billion to $3.1 billion.
The program is expected to deliver 7 to 11 percent production
volume growth in 2005, or 160 million to 165 million barrels of oil
equivalent (BOE), over 2004 pro forma(a) performance of 148 million to
151 million BOE. It also includes increased spending on exploration to
sustain volume growth beyond the next five years.
"Anadarko expects to achieve sustainable, profitable growth by
leveraging our skill sets on the things we do well - developing
unconventional resources and exploring in high-potential basins -
while regularly high-grading our portfolio and maintaining financial
discipline," said Jim Hackett, Anadarko President and CEO.
Anadarko has implemented a refocused strategy, presented in June,
by balancing the portfolio through announced asset sales totaling $3.3
billion, repurchasing 12.9 million outstanding shares at a cost of
$819 million and retiring about $1.2 billion of debt.
"Our 2005 capital budget is essentially unchanged from 2004
capital expenditures, despite the asset divestitures," Hackett said.
"That's largely because we decided to exercise the strategic option to
accelerate drilling certain PUDs - or proven undeveloped locations -
primarily on our low-risk North American unconventional gas
properties. This $200 million program is designed to capitalize on
today's high commodity price environment, adding about $150 million of
net asset value with a payback period of just over two years, while
increasing our 2005 production volume growth by about 2.5 million BOE.
In addition, while we intend to drive down costs where possible, we
have budgeted $400 million for potential increases in oil field
services and materials."
Approximately 64 percent of the total budget is planned for
development activities, 25 percent will go to exploration and the
remaining 11 percent is set aside for capitalized interest, overhead
and other items.
Development spending to generate volume growth in 2005 will focus
on Anadarko's continued success in unconventional tight gas plays in
the Vernon field in North Louisiana and Wild River in Alberta, Canada,
and on delineating new plays in Texas and Louisiana. Production will
continue to ramp up at the company's enhanced oil recovery operations
at the Salt Creek and Monell fields in Wyoming. In the Gulf of Mexico
(GOM), Anadarko will focus on delineation drilling and facilities
installation in the deepwater at K2, K2 North and the Eastern GOM,
which are expected to be significant contributors to the company's
volume growth through 2008. In Alaska, we're expanding the Alpine
facility to increase capacity.
Venezuela is expected to generate good volume growth in 2005. In
Algeria, the company expects to make significant progress on the
development of Block 208 discoveries, with the new production
facilities scheduled to come on-line in 2007.
"As always, exploration is a cornerstone of Anadarko's strategy
and we intend to carry that commitment forward in 2005 by allocating a
quarter of our capital budget to find new sources of energy for the
world's needs," Hackett said.
The exploration budget will focus on a number of key areas in the
deepwater GOM, including prospects such as Genghis Khan, Knotty Head
and Mondo Northwest in the Eastern GOM. In addition, the company will
explore for deep gas objectives in the onshore U.S. and Canada.
International exploration will focus on drilling programs in
Algeria, Qatar, Tunisia and Indonesia, as well as activities within
our targeted new venture areas.
2005 CAPITAL BUDGET BY TYPE 2005 CAPITAL BUDGET BY AREA
Tight Gas 34% U.S. Onshore 46%
Deepwater GOM 23% Deepwater GOM 23%
Enhanced Oil Recovery 6% Canada 13%
Conventional E&P 12% International 9%
Fractured Reservoirs 5% Corporate 9%
Coalbed Methane 2%
International 9%
Corporate 9%
The company's capital program is expected to more than replace
annual production for the 24th consecutive year and increase proved
reserves by 4 percent to 7 percent in 2005. Finding and development
(F&D) costs for 2005 are expected to be between $9 and $12 per BOE.
"With commodity prices substantially above mid-cycle levels, we
expect F&D costs to be higher. But more importantly, our cash margins
have risen more than F&D costs, so returns have improved
significantly. We expect a reserve replacement of 150 percent to 200
percent and a reserve replacement efficiency of 1.8 to 2.2," Hackett
said. "So, in this price environment it makes perfect sense to
accelerate development projects to get volumes on-line sooner, even if
these strategic decisions drive up a single-point metric such as F&D."
DETAILED FINANCIAL INFORMATION ON 2005 GUIDANCE FOLLOWS
2005 BUDGET CONFERENCE CALL TODAY AT 9:00 A.M. CST, 10:00 A.M. EST
Anadarko will host a conference call today at 9:00 a.m. Central
Standard Time (10:00 a.m. Eastern Standard Time) to discuss the
company's 2005 budget and capital program. The dial-in number is
913-981-4900, and the confirmation number is 936386. For complete
instructions on how to actively participate in the conference call, or
to listen to the live audio webcast or a replay, please refer to
www.anadarko.com.
Anadarko Petroleum Corporation's mission is to deliver a
competitive and sustainable rate of return to shareholders by
developing, acquiring and exploring for oil and gas resources vital to
the world's health and welfare. As of year-end 2003, the company had
2.5 billion BOE of proved reserves, making it one of the world's
largest independent exploration and production companies. Anadarko's
operational focus extends from the deepwater Gulf of Mexico, up
through Texas, Louisiana, the Mid-Continent, western U.S. and Canadian
Rockies and onto the North Slope of Alaska. Anadarko also has
significant production in Algeria, Venezuela and Qatar, and
exploration or production positions in several other countries. For
more information about how Anadarko is bringing excellence to the
surface, please visit: 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 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. See Regulatory Matters
and Additional Factors Affecting Business in the Management's
Discussion and Analysis included in the company's 2003 Annual Report
on Form 10-K.
(a) 2004 Pro forma assumes the strategic restructuring occurred as
of January 1, 2004.
Anadarko Petroleum Corporation
As of November 19, 2004
10/29/2004 Total Year
Financial and Total Year 2004 Forecast Total Year
Operating Guidance 2004 Forecast Pro forma(a) 2005 Forecast
---------------- ---------------- ----------------
Units Units Units
---------------- ---------------- ----------------
Total Sales (MM BOE) 189 - 192 148 - 151 160 - 165
Crude Oil (MBbl/d): 183 - 187 149 - 154 165 - 175
United States 87 - 88 61 - 62 74 - 77
Canada 13 - 14 6 - 7 5 - 6
Algeria 61 - 63 61 - 63 59 - 64
Other
International 21 - 23 21 - 23 25 - 29
Natural Gas
(MMcf/d): 1,745 - 1,754 1,360 - 1,370 1,460 - 1,500
United States 1,350 - 1,360 1,085 - 1,090 1,175 - 1,210
Canada 392 - 397 275 - 280 275 - 300
Natural Gas Liquids
(MBbl/d): 43 - 44 30 - 31 28 - 31
United States 40 - 42 29 - 30 26 - 28
Canada 2 - 3 1 - 1 2 - 3
- ----------------------------------------------------------------------
$/ Unit $/ Unit $/ Unit
---------------- ---------------- ----------------
Price Differentials
vs NYMEX (w/o
hedges)
Crude Oil ($/Bbl): (3.40) - (3.55) (3.60) - (3.75) (4.25) - (4.75)
United States (2.35) - (2.40) (2.45) - (2.50) (3.25) - (3.50)
Canada (3.60) - (3.60) (3.60) - (3.60) (7.00) - (8.00)
Algeria (2.25) - (2.30) (2.25) - (2.30) (2.00) - (2.50)
Other
International (11.50) -(11.65) (11.50) -(11.65) (11.50) -(12.50)
Natural Gas ($/Mcf): (0.48) - (0.52) (0.45) - (0.50) (0.35) - (0.45)
United States (0.40) - (0.45) (0.40) - (0.45) (0.30) - (0.40)
Canada (0.70) - (0.75) (0.65) - (0.70) (0.50) - (0.60)
- ----------------------------------------------------------------------
$MM $MM $MM
---------------- ---------------- ----------------
Other Revenues:
Marketing 50 - 53 45 - 48 50 - 70
Minerals and Other 38 - 40 30 - 32 30 - 40
- ----------------------------------------------------------------------
Costs and Expenses:
$ / Boe $ / Boe $ / Boe
---------------- ---------------- ----------------
Direct Operating
Costs 3.40 - 3.45 3.00 - 3.05 3.00 - 3.30
Transportation and
Cost of Product 1.25 - 1.30 1.30 - 1.35 1.40 - 1.55
Depreciation,
Depletion and
Amortization 7.50 - 7.60 7.35 - 7.45 7.25 - 7.50
Production Taxes
(% of Revenue) 5.7% - 5.8% 6.3% - 6.4% 5.6% - 5.8%
$MM $MM $MM
---------------- ---------------- ----------------
Administrative and
General 355 - 365 335 - 345 380 - 410
Impairments of Oil
and Gas Assets 10 - 30 6 - 20 - - 40
Interest Expense 340 - 350 190 - 200 190 - 210
Other (Income)
Expense 67 - 87 67 - 87 - - 10
Federal Tax Rate 35% - 37% 35% - 37% 34% - 36%
Deferred Taxes
(% of Total
Taxes) 5% - 10% 50% - 55% 45% - 50%
- ----------------------------------------------------------------------
Avg. Shares
Outstanding (MM)
Basic 249 - 251 235 - 237 235 - 240
Diluted 251 - 253 238 - 240 236 - 241
$MM $MM $MM
---------------- ---------------- ----------------
Capital Investment 2,980 - 3,030 2,775 - 2,825 2,900 - 3,100
Capital Projects 2,725 - 2,767 2,530 - 2,572 2,665 - 2,845
Capitalized Direct
Expenses 172 - 176 172 - 176 170 - 180
Capitalized
Interest 83 - 87 73 - 77 65 - 75
(a) 2004 Pro forma assumes the strategic restructuring occurred as of
January 1, 2004.
CONTACT: Anadarko Petroleum Corporation, Houston
Media Contacts:
Teresa Wong, 832-636-1203
teresa_wong@anadarko.com
or
Lee Warren, 832-636-3321
lee_warren@anadarko.com
or
Margaret Cooper, 832-636-8355
margaret_cooper@anadarko.com
or
Investor Contacts:
David Larson, 832-636-3265
david_larson@anadarko.com
or
Stewart Lawrence, 832-636-3326
stewart_lawrence@anadarko.com