Anadarko Announces 2016 Capital Program And Guidance

01 Mar, 2016, 08:50 ET from Anadarko Petroleum Corporation

HOUSTON, March 1, 2016 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced its 2016 initial capital expectations and guidance, concurrent with its 2016 Investor Conference Call.

2016 INVESTOR CONFERENCE CALL HIGHLIGHTS

  • Reduces year-over-year capital investments by almost 50 percent(1)
  • Expects higher-margin oil sales volumes to be flat year over year on a divestiture-adjusted basis(2)
  • Doubles Delaware Basin recoverable resource estimate to more than 2 billion barrels of oil equivalent (BOE)
  • Announces plans to monetize up to $3 billion of assets in 2016, with $1.3 billion announced or closed year to date

"In 2016, we will continue our disciplined and focused approach, preserving and building value by leveraging our best-in-class capital allocation, enhancing operational efficiencies and continuing an active monetization program," said Al Walker, Anadarko Chairman, President and CEO. "We are committed to again investing well within cash inflows from a combination of anticipated discretionary cash flow and our ongoing monetizations, with the expectation of also reducing net debt during the year. As we announced last week, we have already closed or announced monetizations totaling approximately $1.3 billion, and we expect our cash position to be further strengthened during the year through substantial cost reductions and additional identified monetization opportunities. We will also benefit from the recent action by our Board to reduce our dividend, which will provide approximately $450 million of additional cash this year."

2016 INITIAL SALES-VOLUME AND CAPITAL EXPECTATIONS

Initial 2016 Capital Expectations ($2.6 - $2.8 Billion)(1)

Billions

Billions

By Area

By Cash Cycle (E&P only)

U.S. Onshore

$

1.1

Short Cash Cycle

$

1.5

International

0.7

Mid Cash Cycle

0.5

Gulf of Mexico

0.7

Long Cash Cycle

0.5

Midstream & Other

0.2

Note: All amounts are approximates.

 

Divestiture-Adjusted(2) Sales-Volume Expectations

2016 Initial Expectations

2015

Total (MMBOE)

282 – 286

292

Oil (MBOPD)

308 – 313

312

U.S. ONSHORE Anadarko's U.S. onshore activities will be reduced the most, by almost $2.5 billion in capital investments year over year, as the company preserves its opportunities, including in two of the highest-returning onshore assets in North America – the Delaware and DJ basins – for a more compelling price environment. The company is reducing its U.S. onshore rig count by 80 percent to five operated rigs, from an average of 25 in 2015, while focusing on its base production and retaining the flexibility to leverage its inventory of approximately 230 drilled but intentionally uncompleted wells. In the Delaware Basin, Anadarko plans to run four operated rigs, which will be directed toward delineation and lease maintenance rather than development activities. To date, the company's successful activities in this play have reduced well costs, identified additional prospective zones and doubled the estimated recoverable resources to more than 2 billion BOE. In the DJ Basin, the company expects to operate one rig, compared to seven in 2015.

GULF OF MEXICO Anadarko's 2016 Gulf of Mexico program will focus on the company's capital-efficient tieback oil opportunities, as well as on advancing appraisal activities. By leveraging its existing infrastructure, Anadarko's tieback opportunities offer returns of more than 30 percent at today's strip prices. These activities will include tiebacks at Lucius, Caesar/Tonga and K2. In addition, Anadarko plans to advance existing discoveries through appraisal activities at Shenandoah and Phobos. One exploration well is planned at the Warrior prospect, which if successful, could be a tieback to K2.

INTERNATIONAL In 2016, Anadarko's planned international activity will include efforts to advance its Paon oil discovery offshore Côte d'Ivoire toward potential development with one appraisal well, a drillstem test, and two exploration wells. Once activities are completed in Côte d'Ivoire, the rig is scheduled to return to Colombia to conduct additional exploration drilling activities. Offshore Ghana, the company expects to achieve first oil at the TEN complex in the third quarter of 2016. In Mozambique, Anadarko expects minimal funding in 2016 as it works three parallel paths toward a Final Investment Decision (FID) for its LNG project. These processes include securing the necessary legal and contractual framework, progressing more than 8 million tonnes per annum of off-take toward long-term sales contracts and advancing project financing.

Four pages of supplemental materials including the company's 2016 initial guidance, updated hedging positions and a reconciliation of divestiture-adjusted sales volumes are provided in the tables attached to this release.

(1) Does not include capital investments by Western Gas Partners, LP (NYSE: WES).

(2) See the accompanying table for a reconciliation of "divestiture-adjusted" or "same-store" sales volumes, which are intended to present performance of Anadarko's continuing asset base, giving effect to divestitures.

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Anadarko Petroleum Corporation's mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world's health and welfare. As of year-end 2015, the company had approximately 2.06 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. For more information about Anadarko and APC Flash Feed updates, 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 such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including Anadarko's ability to realize its expectations regarding performance in this challenging economic environment and meet financial and operating guidance; reduce its net debt; meet the objectives identified in this news release; consummate the transactions described in this news release and identify and complete additional transactions; execute the 2016 capital program; drill, develop and commercially operate the drilling prospects identified in this news release; achieve production and budget expectations on its mega projects; and successfully plan, secure necessary government approvals, enter into long-term sales contracts, finance, build and operate the necessary infrastructure and LNG park in Mozambique. See "Risk Factors" in the company's 2015 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.

Cautionary Note to Investors: The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms. Anadarko uses certain terms in this news release, such as "recoverable resource," and similar terms that the SEC's guidelines strictly prohibit Anadarko from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in Anadarko's Form 10-K for the year ended Dec. 31, 2015, File No. 001-08968, available from Anadarko at www.anadarko.com or by writing Anadarko at: Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380, Attn: Investor Relations. This form may also be obtained by contacting the SEC at 1-800-SEC-0330.

ANADARKO CONTACTS

MEDIA:
John Christiansen, john.christiansen@anadarko.com, 832.636.8736
Stephanie Moreland, stephanie.moreland@anadarko.com, 832.636.2912

INVESTORS:
John Colglazier, john.colglazier@anadarko.com, 832.636.2306
Jeremy Smith, jeremy.smith@anadarko.com, 832.636.1544
Shandell Szabo, shandell.szabo@anadarko.com, 832.636.3977

 

Anadarko Petroleum Corporation

Financial and Operating External Guidance

March 1, 2016






Note: Guidance excludes 2016 sales volumes associated with pending East Chalk divestiture.








1st-Qtr


Full-Year



Guidance (see Note)


Guidance (see Note)



 Units


 Units










Total Sales Volumes (MMBOE)


74



76



282



286


Total Sales Volumes (MBOE/d)


813



835



770



781











Oil (MBbl/d)


311



316



308



313











United States


229



232



222



225


Algeria


64



65



59



60


Ghana


18



19



27



28











Natural Gas (MMcf/d)


















United States


2,250



2,290



2,030



2,060











Natural Gas Liquids (MBbl/d)


















United States


119



123



117



120


Algeria


5



7



5



7






















 $ / Unit


 $ / Unit

Price Differentials vs. NYMEX (w/o hedges)


















Oil ($/Bbl)


(7.00)



(2.00)



(7.00)



(2.00)











United States


(8.00)



(3.00)



(8.00)



(3.00)


Algeria


(3.00)





(4.00)



(1.00)


Ghana


(3.00)





(4.00)



(1.00)











Natural Gas ($/Mcf)


















United States


(0.40)



(0.15)



(0.40)



(0.20)














Anadarko Petroleum Corporation

Financial and Operating External Guidance

March 1, 2016






Note: Guidance excludes 2016 sales volumes associated with pending East Chalk divestiture.








1st-Qtr


Full-Year



Guidance (see Note)


Guidance (see Note)



 $ MM


 $ MM

Other Revenues









Marketing and Gathering Margin


15



35



145



165


Minerals and Other


45



65



185



205











Costs and Expenses











 $ / BOE


 $ / BOE

Oil & Gas Direct Operating


3.00



3.15



3.20



3.40


Oil & Gas Transportation


3.40



3.60



3.55



3.75


Depreciation, Depletion, and Amortization


14.90



15.25



15.80



16.00


Production Taxes (% of Product Revenue)


8.0

%


9.0

%


8.0

%


9.0

%












 $ MM


 $ MM










General and Administrative


280



300



975



1,025


Other Operating Expense


25



35



55



65


Exploration Expense









    Non-Cash


60



80



350



450


    Cash


50



70



280



300


Interest Expense (net)


205



215



840



860


Other (Income) Expense


50



60



200



225











Taxes









Algeria (100% current)


70

%


75

%


70

%


75

%

Rest of Company (1Q 5% current; Total Year 10% current)


30

%


40

%


30

%


40

%



















Avg. Shares Outstanding (MM)









Basic


508



509



509



510


Diluted


509



510



510



511




















Capital Investment (Excluding Western Gas Partners, LP)

 $ MM


 $ MM










APC Capital Expenditures


800



900



2,600



2,800





Anadarko Petroleum Corporation

Commodity Hedge Positions

As of March 1, 2016
















Weighted Average Price per barrel




Volume (MBbls/d)


Floor Sold


Floor Purchased


Ceiling Sold

Oil









Three-Way Collars








2016









WTI


65

$

41.54

$

53.08

$

62.25


Brent


18

$

47.22

$

59.44

$

69.47




83

$

42.77

$

54.46

$

63.82





































Interest-Rate Derivatives

As of March 1, 2016







Instrument

Notional Amt.

Reference Period

Mandatory Termination Date

Rate Paid

Rate Received

Swap

$50 Million

Sept. 2016 - Sept. 2026

Sept. 2016

5.910%

3M LIBOR

Swap

$50 Million

Sept. 2016 - Sept. 2046

Sept. 2016

6.290%

3M LIBOR

Swap

$500 Million

Sept. 2016 - Sept. 2046

Sept. 2018

6.559%

3M LIBOR

Swap

$300 Million

Sept. 2016 - Sept. 2046

Sept. 2020

6.509%

3M LIBOR

Swap

$450 Million

Sept. 2017 - Sept. 2047

Sept. 2018

6.445%

3M LIBOR

Swap

$300 Million

Sept. 2017 - Sept. 2047

Sept. 2020

6.569%

3M LIBOR

Swap

$250 Million

Sept. 2017 - Sept. 2047

Sept. 2021

6.570%

3M LIBOR




Anadarko Petroleum Corporation

Reconciliation of Divestiture-Adjusted Sales Volumes









Average Daily Sales Volumes


Oil &








Condensate


Natural Gas


NGLs


Total


MBbls/d


MMcf/d


MBbls/d


MBOE/d

Quarter Ended March 31, 2015








U.S. Onshore

167



2,232



129



668


Deepwater Gulf of Mexico

46



221



6



89


International and Alaska

107





7



114


Divestiture-Adjusted Sales

320



2,453



142



871


Divestitures*

15



285



1



63


Total

335



2,738



143



934










Quarter Ended June 30, 2015








U.S. Onshore

173



1,976



122



625


Deepwater Gulf of Mexico

57



113



7



83


International and Alaska

87





6



92


Divestiture-Adjusted Sales

317



2,089



135



800


Divestitures*

1



265



1



46


Total

318



2,354



136



846










Quarter Ended September 30, 2015








U.S. Onshore

160



1,870



109



581


Deepwater Gulf of Mexico

55



158



7



88


International and Alaska

84





5



89


Divestiture-Adjusted Sales

299



2,028



121



758


Divestitures*

2



158



1



29


Total

301



2,186



122



787










Quarter Ended December. 31, 2015








U.S. Onshore

164



1,940



105



592


Deepwater Gulf of Mexico

54



115



6



80


International and Alaska

96





6



102


Divestiture-Adjusted Sales

314



2,055



117



774


Divestitures*

2



13



1



5


Total

316



2,068



118



779










Year Ended December 31, 2015








U.S. Onshore

165



2,003



116



615


Deepwater Gulf of Mexico

53



152



7



85


International and Alaska

94





6



100


Divestiture-Adjusted Sales

312



2,155



129



800


Divestitures*

5



179



1



36


Total

317



2,334



130



836










Includes EOR, Bossier, Powder River Basin CBM, and East Chalk (transaction pending).

 

 

SOURCE Anadarko Petroleum Corporation



RELATED LINKS

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