Earnings Decrease Due to Low Oil Prices;
Operating Results for 1998 Could Be Best in Company History
HOUSTON, July 29 /PRNewswire/ -- Anadarko Petroleum Corporation
(NYSE: APC) today announced financial and operating results for the second
quarter of 1998.
Second Quarter 1998
For the second quarter of 1998, Anadarko's net income applicable to common
stockholders was $2.7 million (two cents per share, or five cents per share
before the effect of a recent stock split)(A). Revenues for the second quarter
of 1998 were $137.6 million. By comparison, net income for the second quarter
of 1997 was $13.8 million (12 cents per share) on revenues of $139.0 million.
The decrease in net income and revenues is due to significantly lower oil
prices and lower natural gas volumes during the 1998 second quarter, partially
offset by higher oil production volumes. Net income for the second quarter of
1998 also reflects slightly higher costs and expenses, higher interest expense
and preferred stock dividends.
"Low oil prices hurt our earnings," said Anadarko's Chairman, President
and Chief Executive Officer, Robert J. Allison, Jr. "But that's a short-term
problem. We believe prices will recover. I think it's more important that our
exploration and development drilling programs are on track to give us our best
operating results in history(B). At the end of the first quarter, we had
already replaced 240% of our expected production for 1998 -- and we still have
a number of potentially significant wells drilling.
Allison also said that Anadarko had not cut its 1998 planned capital
investment program of about $800 million. "We told stockholders earlier this
year that we have the capital resources, people, prospects and projects in
place to grow the Company dramatically over the next few years at today's
prices," said Allison. Anadarko did, however, shift spending programs to take
greater advantage of stronger natural gas prices and deferred into next year
some oil drilling programs in west Texas.
During the second quarter of 1998, Anadarko's oil volumes increased
19 percent to 2.7 million barrels (MMBbls) or 29 thousand barrels (MBbls) per
day compared to 2.2 MMBbls or 25 MBbls per day in the same period of 1997. The
increase in oil volumes is partly due to higher production from the Mahogany
Field in the Gulf of Mexico and first oil production from the Company's Hassi
Berkine South Field in Algeria. Algerian oil production began May 4 and
totaled about 450,000 barrels (gross) through the end of the second quarter of
1998. Higher oil production volumes were offset by a 34 percent decrease in
oil prices during the second quarter of 1998. Anadarko's average U.S. oil
price in the second quarter of 1998 was $11.50 per barrel compared to
$17.48 per barrel in the same period of 1997.
Anadarko's natural gas production during the second quarter of 1998 was
42.2 billion cubic feet (Bcf) of gas or 463 million cubic feet per day
(MMcf/d). This represents a slight decrease over second quarter 1997 gas
production of 43.8 Bcf of gas or 481 MMcf/d. The decrease in gas volumes is
partly due to annual allowable testing in the West Panhandle Field of Texas
and in the Hugoton Embayment. Anadarko's average price for natural gas in the
second quarter of 1998 was $1.98 per thousand cubic feet (Mcf) compared to
$1.85 per Mcf in the same period of 1997.
Anadarko's natural gas liquids (NGLs) sales volumes in the second quarter
of 1998 increased 52 percent to 1.6 MMBbls or 17 MBbls per day compared to
1.0 MMBbls or 11 MBbls per day in the same period of 1997. Higher volumes were
partly offset by 19 percent lower NGLs prices, averaging $10.90 per barrel in
the second quarter of 1998 compared to $13.45 per barrel in the same period of
1997.
First Half 1998
Stated on an energy equivalent barrel (EEB) basis, Anadarko's year-to-date
1998 production volumes are running about 8 percent ahead of the same period
in 1997. At the end of June 1998, Anadarko had produced 22.6 million EEBs.
"Just like last year, our production growth for 1998 is back-end weighted.
Many of the projects underway in the first half of this year are expected to
deliver significantly higher volumes in the third and fourth quarters," said
Allison.
For the first half of 1998, Anadarko's net income applicable to common
stockholders was $9.7 million (8 cents per share or 16 cents per share before
the effect of a recent stock split). Revenues for the first six months of
1998 were $284.5 million. By comparison, net income for the first half of
1997 was $48.2 million (40 cents per share) on revenues of $310.4 million. The
decrease in net income and revenues reflects significantly lower commodity
prices for oil, gas and NGLs, partially offset by higher production volumes.
Net income also reflects higher costs and expenses, higher interest expense
and preferred stock dividends during the first half of 1998.
Anadarko's oil production in the first half of 1998 increased 16 percent
over the same period in 1997. The 1998 oil volumes to date total 4.9 MMBbls or
28 MBbls per day compared to 4.3 MMBbls or 23 MBbls per day in the first half
of 1997. The significant increase in oil volumes is partly due to higher
production from the Mahogany Field and first oil production from Algeria. U.S.
oil prices, however, decreased 36 percent during the first half of 1998 to
average $12.21 per barrel compared to an average price in the first half of
1997 of $18.94 per barrel.
Anadarko's natural gas production in the first half of 1998 was flat
compared to the same period of 1997. During the first half of 1998, Anadarko
produced 86.2 Bcf of gas or 476 MMcf/d. During the period, natural gas prices
decreased 11 percent to average $2.00 per Mcf compared to an average price of
$2.24 per Mcf in the same period of 1997.
NGLs volumes in the first half of 1998 increased 45 percent to 3.3 MMBbls
or 18 MBbls per day. This compares to production of 2.3 MMBbls or 13 MBbls per
day in the same period of 1997. The significant increase in volumes was partly
offset by a 23 percent decrease in NGLs prices during the first half of 1998.
Anadarko's average NGLs price was $11.31 per barrel in the first half of 1998
compared to $14.65 per barrel in the same period of 1997.
This 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 1934. Anadarko believes that its expectations are based on
reasonable assumptions. No assurances, however, can be given that its goals
will be achieved. See Additional Factors Affecting Business in the
Management's Discussion and Analysis (MD&A) included in the Company's 1997
Annual Report on Form 10-K.
A - On April 30, 1998, Anadarko announced a two-for-one stock split. The
stock split was effected by way of a 100-percent stock dividend. The date of
the stock split was July 1, 1998. Today, the Company has about 120 million
shares of common stock outstanding.
B - To date, Anadarko's "best" annual operating results came in 1997 when
the Company posted a reserve replacement ratio of 341% and added proved
reserves of 151 million EEBs.
Anadarko Petroleum Corporation
Quarter Ended Year to Date
Summary Financial Information June 30 June 30
$ and shares in millions
1998 1997 1998 1997
Revenues
Gas sales $87.7 $83.2 $ 181.2 $ 190.2
Oil and condensate sales 31.6 39.9 63.0 82.5
Natural gas liquids
and other 18.3 15.9 40.3 37.7
Total 137.6 139.0 284.5 310.4
Costs and Expenses
Operating expenses 38.7 33.5 78.9 66.3
Administrative and general 21.7 17.2 43.0 34.2
Depreciation, depletion
and amortization 48.4 47.9 99.7 93.3
Other taxes 8.5 10.6 19.4 23.6
(Gains) and impairments
related to international
properties, net 0.0 0.0 0.0 0.0
Total 117.3 109.2 241.0 217.4
Operating Income 20.3 29.8 43.5 93.0
Interest Expense 13.8 8.0 26.1 17.2
Income before Income Taxes 6.5 21.8 17.4 75.8
Income Taxes 2.2 8.0 6.1 27.6
Net Income $4.3 $13.8 $11.3 $48.2
Preferred Stock Dividends 1.6 0.0 1.6 0.0
Net Income Applicable
to Common Stockholders $2.7 $13.8 $9.7 $48.2
Per Common Share
Net income - basic $0.02 $0.12 $0.08 $0.40
Net income - diluted $0.02 $0.11 $0.08 $0.40
Dividends $0.05 $0.0375 $0.0875 $0.075
Average Number of
Shares Outstanding 120.0 119.3 119.9 119.3
Cash Flow from Operations
before Changes in Assets
and Liabilities
Net income $4.3 $13.8 $11.3 $48.2
Depreciation, depletion
and amortization 48.4 47.9 99.7 93.3
Amortization of
restricted stock 0.3 0.4 0.6 1.0
Deferred U.S. income taxes 2.0 8.7 6.0 18.4
Provision for impairments 0.0 0.0 0.0 0.0
Total $55.0 $70.8 $ 117.6 $ 160.9
Capital Expenditures
Capital spending $ 171.1 $ 165.0 $ 411.9 $ 266.7
Capitalized interest 6.4 5.3 12.3 10.0
Capitalized overhead 22.1 18.5 43.5 32.6
Total $ 199.6 $ 188.8 $ 467.7 $ 309.3
Capitalization
Long-term debt $1,139.4 $ 792.0
Stockholders' equity 1,320.7 1,060.5
Total $2,460.1 $1,852.5
Capitalization Ratios
Long-term debt 46% 43%
Stockholders' equity 54% 57%
Total Assets $3,360.4 $2,697.8
Anadarko Petroleum Corporation
Quarter Ended Year to Date
Volumes and U.S. Prices June 30 June 30
1998 1997 1998 1997
Natural Gas
Volumes, billion cubic feet42.2 43.8 86.2 86.1
Average daily volumes,
million cubic feet per day463 481 476 476
Price per thousand
cubic feet $1.98 $1.85 $2.00 $2.24
Crude Oil and Condensate
Volumes, thousand barrels2,680 2,249 4,932 4,251
Average daily volumes,
thousand barrels per day 29 25 28 23
Price per barrel $ 11.50 $ 17.48 $ 12.21 $ 18.94
Natural Gas Liquids
Volumes, thousand barrels1,569 1,032 3,273 2,263
Average daily volumes,
thousand barrels per day 17 11 18 13
Price per barrel $ 10.90 $ 13.45 $ 11.31 $ 14.65
Total Energy Equivalent Barrels
Volumes, million EEBs 11.3 10.6 22.6 20.9
SOURCE Anadarko Petroleum Corporation
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CONTACT:
A. Paul Taylor of Anadarko Petroleum,
281-875-1101
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