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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, 1994
Commission File Number: 1-8968
_____________________
ANADARKO PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0146568
(State or other jurisdic- (I.R.S. Employer Iden-
tion of incorporation tification No.)
or organization)
17001 NORTHCHASE DRIVE, HOUSTON, TEXAS 77060
(Address of executive offices) (Zip Code)
(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, 1994 is shown below:
Number of Shares
Title of Class Outstanding
Common Stock, $0.10 par value 58,842,054
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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 1994 1993 1994 1993
Revenues
Gas sales $ 67,083 $ 65,074 $243,519 $219,698
Oil and condensate sales 34,753 30,691 93,935 97,147
Natural gas liquids and other 9,519 7,506 25,410 28,221
Total 111,355 103,271 362,864 345,066
Costs and Expenses
Operating expenses 24,127 22,762 76,651 70,943
Administrative and general 15,339 14,043 45,222 42,098
Depreciation, depletion and
amortization 40,807 37,412 131,490 120,894
Other taxes 10,195 10,080 31,982 31,267
Provisions for impairments of
international properties --- --- --- 4,700
Total 90,468 84,297 285,345 269,902
Operating Income 20,887 18,974 77,519 75,164
Other Income 698 255 1,873 2,544
Gross Income 21,585 19,229 79,392 77,708
Interest Expense 7,126 6,088 20,843 22,431
Income before Income Taxes and
Cumulative Effect of Changes
in Accounting Principles 14,459 13,141 58,549 55,277
Income Taxes
Income taxes 4,154 3,882 19,499 18,370
Effect of change in income tax rate --- 11,249 --- 11,249
Total 4,154 15,131 19,499 29,619
Net Income (Loss) before Cumulative Effect
of Changes in Accounting Principles 10,305 (1,990) 39,050 25,658
Cumulative Effect of Changes in
Accounting Principles --- --- --- 77,403
Net Income (Loss) $ 10,305 $ (1,990) $ 39,050 $103,061
Per Common Share
Net income (loss) before cumulative effect
of changes in accounting principles $ 0.18 $ (0.03) $ 0.66 $ 0.45
Cumulative effect of changes in
accounting principles --- --- --- 1.36
Net income (loss) 0.18 (0.03) 0.66 1.82
Dividends $ 0.075 $ 0.075 $ 0.225 $ 0.225
Average Number of Shares Outstanding 58,802 58,594 58,752 56,741
See accompanying notes to consolidated financial statements.
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Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, December 31,
thousands 1994 1993
ASSETS
Current Assets
Cash and cash equivalents $ 55,882 $ 17,799
Accounts receivable 89,809 110,486
Inventories, at average cost 13,760 9,551
Prepaid expenses 341 3,025
Total 159,792 140,861
Properties and Equipment
Original cost 3,525,313 3,266,825
Less accumulated depreciation, depletion
and amortization 1,539,046 1,425,098
Net properties and equipment - based on
the full cost method of accounting
for oil and gas properties 1,986,267 1,841,727
Deferred Charges 31,150 40,198
$2,177,209 $2,022,786
See accompanying notes to consolidated financial statements.
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Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEET (continued)
(Unaudited)
September 30, December 31,
thousands 1994 1993
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
Trade and other $ 92,150 $ 92,311
Banks 13,671 13,328
Accrued expenses
Interest 7,660 7,663
Taxes and other 18,528 12,715
Total 132,009 126,017
Long-term Debt 655,576 542,500
Deferred Credits
Deferred income taxes 440,795 424,293
Other 54,777 65,810
Total 495,572 490,103
Stockholders' Equity
Common stock, par value $0.10
(200,000,000 shares authorized,
58,812,381 and 58,668,407 shares issued
and outstanding as of September 30, 1994
and December 31, 1993, respectively) 5,926 5,912
Preferred stock, par value $1.00
(2,000,000 shares authorized, no
shares issued as of September 30, 1994
and December 31, 1993) --- ---
Paid-in capital 241,415 236,001
Retained earnings (as of September 30, 1994,
$244,052,000 was not restricted
as to the payment of dividends) 650,450 625,308
Deferred compensation (3,739) (3,055)
Total 894,052 864,166
$2,177,209 $2,022,786
See accompanying notes to consolidated financial statements.
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Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
thousands 1994 1993
Cash Flow from Operating Activities
Net income $ 39,050 $103,061
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation, depletion and amortization 131,490 120,894
Amortization of restricted stock 900 1,229
Deferred income taxes 17,386 29,774
Cumulative effect of changes in
accounting principles --- (77,403)
Provisions for impairments of international
properties --- 4,700
188,826 182,255
Decrease in accounts receivable 20,677 17,285
Increase in inventories (4,209) (546)
Increase in accounts payable - trade and
other and accrued expenses 5,649 14,209
Other items - net 1,857 (1,612)
Net cash from operating activities 212,800 211,591
Cash Flow from Investing Activities
Additions to properties and equipment (337,617) (180,824)
Sales and retirements of properties and equipment 59,144 3,269
Net cash used in investing activities (278,473) (177,555)
Cash Flow from Financing Activities
Additions to debt 113,076 123,679
Retirements of debt --- (141,722)
Increase (decrease) in accounts payable, banks 343 (4,811)
Dividends paid (13,222) (12,817)
Issuance of common stock 3,844 5,557
Issuance of treasury stock 316 899
Purchase of treasury stock (355) (179)
Net cash from (used in) financing activities 104,002 (29,394)
Effect of Exchange Rate Changes on Cash (246) (406)
Net Increase in Cash and Cash Equivalents 38,083 4,236
Cash and Cash Equivalents at Beginning of Period 17,799 14,833
Cash and Cash Equivalents at End of Period $ 55,882 $ 19,069
See accompanying notes to consolidated financial statements.
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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. The terms "Anadarko" and "Company" refer to Anadarko Petroleum
Corporation and its subsidiaries. The principal subsidiaries of Anadarko are
Anadarko Gathering Company, Anadarko Marketing Company, Anadarko Trading
Company, Anadarko Petroleum of Canada Ltd. and Anadarko Algeria Corporation.
Effective January 1, 1993, Anadarko adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes", which resulted in an
increase to net income of $87,071,000 and SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions", which resulted in a decrease
to net income of $9,668,000.
2.Inventories The major classes of inventories are as follows:
September 30, December 31,
thousands 1994 1993
Materials and supplies $10,995 $8,226
Natural gas liquids, stored in inventory 1,931 1,325
Natural gas, stored in inventory 834 ---
$13,760 $9,551
3.Properties and Equipment Oil and gas properties include costs of
$254,146,000 and $180,933,000 at September 30, 1994 and December 31, 1993,
respectively, which were excluded from capitalized costs being amortized.
These amounts represent costs associated with unevaluated properties and major
development projects.
4.Long-term Debt and Financial Instruments A summary of long-term debt
follows:
September 30, December 31,
thousands 1994 1993
Notes Payable, Banks $162,000 $142,500
Commercial Paper 93,576 ---
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
$655,576 $542,500
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Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
4.Long-term Debt and Financial Instruments (continued)
In May 1994, the Company entered into a $250,000,000 Revolving Credit
Agreement and a $150,000,000 364-Day Credit Agreement with a group of 11
commercial banks. Interest rates are based on either the reference rate,
the rate of certificate of deposit, the Eurodollar rate or a combination
thereof. The Agreements provide for commitment fees on the unused balances
at a rate of 18.5/100 of one percent and 12.5/100 of one percent for the
Revolving Credit Agreement and 364-Day Credit Agreement, respectively. The
Revolving Credit Agreement will expire in 1999. The Agreements replaced the
Revolving Credit Agreement entered into in February 1992. As of September
30, 1994, there were no outstanding borrowings under these Agreements.
The notes payable to banks and commercial paper have been classified as
long-term debt in accordance with SFAS 6, "Classification of Short-term
Obligations Expected to be Refinanced", under the terms of Anadarko's
$400,000,000 Bank Credit Agreements.
In October 1993, the Company accepted a $2,600,000 payment for an option
giving the purchaser the right to enter into an interest rate swap agreement
exercisable in October 1994. This agreement, if exercised, would
effectively fix the rate the Company would pay on a notional $100,000,000 of
its floating interest rate debt at six percent for nine years. The
$2,600,000 payment and the related agreement hedged the Company's floating
interest rate debt. The option was not exercised in October 1994 and as a
result the Company will record a reduction to interest expense of $2,600,000
in the fourth quarter of 1994.
5.Stock For the third quarter of 1994, dividends of 7.5 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 $244,052,000 and $464,166,000 were not
restricted as to the payment of dividends at September 30, 1994 and December
31, 1993, 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 1994 1993
Interest $18,586 $22,931
Income taxes $ 451 $ 5,544
In July 1993, $99,778,000 principal amount of 6 1/4% Convertible
Subordinated Debentures due 2014 were converted into 2,917,276 shares of
Anadarko Common Stock.
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Item 1. Financial Statements (continued)
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7.Income Taxes The Omnibus Budget Reconciliation Act of 1993, which was
enacted in August 1993, raised the top corporate income tax rate from 34 to
35 percent retroactive to January 1, 1993. As a result, Anadarko recorded a
charge to third quarter 1993 earnings of $11,249,000 (19 cents per share).
8.Contingencies - Environmental In January 1994, the Company received a
Special Notice for Remedial Design/Remedial Action from the Environmental
Protection Agency (EPA) in connection with the disposal of oil and gas
exploration and production wastes at the PAB Oil Superfund site (the "Site")
at Abbeville, Louisiana. The Company had previously received a Notice of
Potential Liability from the EPA as one of the potentially responsible
parties (PRP) in connection with this Site. In the Notice of Potential
Liability, the EPA attributed 40 barrels of waste to the Company which was
disposed of by a third party contractor on behalf of the Company. In
October 1994, Anadarko signed an Administrative Order on Consent with the
EPA for $8,040 in settlement of the Company's potential liability.
On December 17, 1993, the Company received a notice from the Department of
Justice in the State of California indicating the Company may be a PRP for
the study, cleanup and closure of the waste facility owned by Geothermal,
Inc. in Middletown, California (the GI site ). Anadarko's records indicate
the disposal of a limited number of barrels of drilling mud at the GI site
in 1982. During the first quarter of 1994, the Company, along with other
PRPs, became a party to a Cost Sharing, Joint Defense and Confidentiality
Agreement, effective October 20, 1993. The Company believes its share of
costs in connection with the cleanup of the GI site will not have a material
effect on its financial position or results of operations and will be
approximately $35,000 to $70,000.
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, 1994 and December 31, 1993, the
results of operations for the three and nine months ended September 30, 1994
and 1993, and cash flows for the nine months ended September 30, 1994 and
1993.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
For the third quarter of 1994, Anadarko's net income was $10.3 million (18
cents per share of common stock outstanding) compared to income (before the
effect of a change in income tax rate) of $9.3 million (16 cents per share) for
the third quarter of 1993. The 1993 third quarter results included a special
tax charge of $11.2 million (19 cents per share) to adjust deferred tax
liabilities for the increase in the top corporate income tax rate. Stated with
the effect of this charge, Anadarko had a net loss of $2.0 million (three cents
per share) for the third quarter of 1993.
For the first nine months of 1994, Anadarko's net income was $39.1 million (66
cents per share). This compares to income, before the effect of the change in
income tax rate and changes in accounting principles, of $36.9 million (65
cents per share) for the same period of 1993. The changes in accounting
principles were implemented in January 1993 and related to changes in
accounting for income taxes and postretirement benefits other than pensions.
Including the effect of the change in income tax rate and the cumulative effect
of changes in accounting principles, net income for the first nine months of
1993 was $103.1 million ($1.82 per share).
Operating Results
Revenues for the third quarter of 1994 were $111.4 million, up eight percent
compared to $103.3 million for the third quarter of 1993. The increase in
revenues for the third quarter of 1994 is due primarily to higher volumes of
natural gas, oil and natural gas liquids (NGLs), which was partially offset by
a decline in natural gas prices.
Revenues for the first nine months of 1994 were $362.9 million, an increase of
five percent compared to $345.1 million for the same period of 1993. The
increase in revenues for the first nine months of 1994 is due primarily to
higher volumes of natural gas, oil and NGLs, which was partially offset by
declines in prices. The following table shows the Company's volumes and U.S.
prices for the three and nine months ended September 30, 1994 and 1993:
Three Months Ended
September 30 % Increase
1994 1993 (Decrease)
Natural gas, million cubic feet 40,925 35,710 15
Price per thousand cubic feet $ 1.59 $ 1.94 (18)
Crude oil and condensate,
thousand barrels 2,066 1,976 5
Price per barrel $ 16.55 $ 15.81 5
Natural gas liquids,
thousand barrels 626 516 21
Price per gallon $ 0.33 $ 0.31 6
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Nine Months Ended
September 30 % Increase
1994 1993 (Decrease)
Natural gas, million cubic feet 132,110 117,270 13
Price per thousand cubic feet $ 1.80 $ 1.90 (5)
Crude oil and condensate,
thousand barrels 6,321 5,810 9
Price per barrel $ 14.88 $ 17.06 (13)
Natural gas liquids,
thousand barrels 1,919 1,765 9
Price per gallon $ 0.29 $ 0.33 (12)
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 1994 were $90.5 million, an
increase of $6.2 million (seven percent) compared to $84.3 million for the
third quarter of 1993. The increase was due to several factors:
(1) Depreciation, depletion and amortization increased $3.4 million
(nine percent) due to higher production volumes.
(2) Operating expenses were up $1.4 million (six percent) due primarily
to an increase in gas purchased expense.
(3) Administrative and general expenses were up $1.3 million (nine
percent) due to an increase in salary and benefits for the Company's
growing workforce.
For the first nine months of 1994, costs and expenses were $285.3 million, an
increase of $15.4 million (six percent) compared to $269.9 million for the
first nine months of 1993. The increase in costs and expenses was due to
several factors:
(1) Depreciation, depletion and amortization increased $10.6 million
(nine percent) due to higher production volumes.
(2) Operating expenses were up $5.7 million (eight percent) due to
higher gas purchased expense and oil and gas operating expenses.
(3) Administrative and general expenses were up $3.1 million (seven
percent) due to an increase in salary and benefits for the Company's
growing workforce.
The first nine months of 1993 costs and expenses included $4.7 million in
impairments for international properties recorded in the first quarter of 1993.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Interest expense for the third quarter of 1994 was $7.1 million, an increase of
17 percent compared to $6.1 million for the third quarter of 1993. The
increase in interest expense for the third quarter is due to higher average
debt outstanding at slightly higher interest rates partially offset by an
increase in capitalized interest. For the first nine months of 1994, interest
expense was $20.8 million, a decrease of seven percent compared to $22.4
million for the same period of 1993. The decrease in interest expense for the
first nine months of 1994 is due primarily to higher amounts of capitalized
interest during 1994 related to an increase in costs excluded from amortization
as a result of the offshore lease acquisitions in 1994, partly offset by higher
average debt outstanding at slightly higher interest rates.
Natural Gas Volumes, Prices and Markets During the third quarter of 1994,
Anadarko produced 40.9 billion cubic feet (Bcf) or 445 million cubic feet per
day (MMcf/d) of natural gas, up 15 percent compared to 35.7 Bcf or 388 MMcf/d
of gas in the third quarter of 1993. Anadarko's average U.S. gas price during
the third quarter of 1994 was $1.59 per thousand cubic feet (Mcf), an 18
percent decrease from $1.94 per Mcf in the third quarter of 1993.
For the first nine months of 1994, Anadarko produced 132.1 Bcf or 484 MMcf/d of
gas, up 13 percent compared to 117.3 Bcf or 430 MMcf/d of gas for the same
period of 1993. The Company's average U.S. gas price for the first nine months
of 1994 was $1.80 per Mcf, a five percent decrease from $1.90 per Mcf for the
same period of 1993.
The increases in gas production stem primarily from higher production
allowables in the Hugoton Field of Kansas and the West Panhandle Field of
Texas.
Historically, natural gas sales markets have been highly seasonal because of
the increase in residential heating demand during the winter. Due to this
seasonality, Anadarko's natural gas prices and production volumes and,
therefore, financial results have traditionally been stronger in the first
and fourth quarters.
Crude Oil, Condensate and Natural Gas Liquids Volumes and Prices Anadarko's
crude oil and condensate production for the third quarter of 1994 increased
five percent to 2.1 million barrels (MMBbls) from 2.0 MMBbls in the third
quarter of 1993. Anadarko's average U.S. oil price increased five percent to
$16.55 per barrel in the third quarter of 1994 compared to $15.81 per barrel
for the same period in 1993.
For the first nine months of 1994, crude oil and condensate production was 6.3
MMBbls, an increase of nine percent compared to 5.8 MMBbls for the same period
of 1993. Anadarko's average U.S. oil price for the first nine months of 1994
was $14.88 per barrel, a decrease of 13 percent compared to $17.06 per barrel
for the same period of 1993.
The increases in oil production are due primarily to higher volumes from
several waterflood oil projects in Southwest Kansas and West Texas.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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 seasonal
swings in market prices.
NGLs sales volumes were up 21 percent to 626 thousand barrels (MBbls) at an
average price of 33 cents per gallon for the third quarter of 1994. This
compares to 516 MBbls at an average price of 31 cents per gallon for the same
period of 1993. The increase in volumes is due primarily to an increase in
product sold from inventory partially offset by a decrease in production.
NGLs volumes for the first nine months of 1994 were up nine percent to 1,919
MBbls at an average price of 29 cents per gallon compared to 1,765 MBbls at an
average price of 33 cents per gallon during the same period of 1993. The
increase in volumes is due primarily to higher production volumes and a
decrease in product stored in inventory.
Hedging Strategies Anadarko uses hedges to limit the Company's and its
customers' exposure to changes in the market price of natural gas and crude
oil. Gains or losses on hedges are recorded when the production being hedged
has been produced or delivered or the hedge instrument expires. As a result,
gains and losses on these hedges are generally offset by similar changes in the
price of natural gas and crude oil. Anadarko's hedges currently are comprised
of futures, swaps and options.
While hedges are intended to reduce the Company's exposure to declines in the
market price of natural gas and crude oil, the hedges may limit the Company's
gain from increases in the market price of natural gas and crude oil.
Capital Expenditures, Liquidity and Dividends
During the first nine months of 1994, Anadarko's capital spending (including
capitalized interest and overhead) was $337.2 million compared to $180.2
million in the same period of 1993. Capital expenditures in both periods
related primarily to the Company's oil and gas exploration and development
activities. The increase in capital expenditures for 1994 includes $72
million for offshore leases in the Gulf of Mexico that were acquired in March
1994.
Net cash from operating activities for the first nine months of 1994 was $212.8
million compared to $211.6 million in the first nine months of 1993.
Anticipated higher cash flows and proceeds from divestitures have led the
Company to increase its original capital budget for 1994 from $370 million to
$460 million, an increase of 24 percent. The Company's revised spending budget
includes increased investments in offshore leases, exploratory drilling onshore
and offshore U.S., and construction of platforms and other development facili-
ties in the Gulf of Mexico.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
On November 1, 1994, Anadarko closed the sale of a package of Rocky Mountain
properties located in Colorado, Wyoming, Montana, North Dakota and Utah for $26
million to Plains Petroleum Operating Company. In addition, in 1994, the
Company has received $59 million from the sale of properties in Canada,
Arkansas, Louisiana and eastern Oklahoma.
The Company believes cash flows and existing available credit facilities will
be sufficient to meet capital and operating requirements during the remainder
of 1994. However, Anadarko may pursue other financing options to reduce or
stabilize interest costs.
In May 1994, the Company entered into a $250 million Revolving Credit Agreement
and a $150 million 364-Day Credit Agreement with a group of 11 commercial
banks. These Agreements replaced the Revolving Credit Agreement entered into
in February 1992. As of September 30, 1994, there were no outstanding
borrowings under these Agreements.
Anadarko's Board of Directors declared a quarterly dividend of seven and one-
half cents per share of common stock outstanding. The dividend is payable on
December 28, 1994 to stockholders of record on December 14, 1994. Under the
most restrictive provisions of the various credit agreements, which limit the
payment of dividends by the Company, retained earnings of $244,052,000 and
$464,166,000 were not restricted as to the payment of dividends at September
30, 1994 and December 31, 1993, respectively. 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.
Exploration and Development Drilling
During the third quarter of 1994, Anadarko participated in a total of 66 wells,
including 36 oil wells, 18 gas wells and 12 dry holes. This compares to a
total of 46 wells, including 22 oil wells, 12 gas wells and 12 dry holes
during the third quarter of 1993. For the first nine months of 1994, Anadarko
participated in a total of 194 wells, including 105 oil wells, 57 gas wells and
32 dry holes. This compares to a total of 126 wells, including 62 oil wells,
39 gas wells and 25 dry holes during the first nine months of 1993. Anadarko
made several significant completions during the quarter.
Algeria In August 1994, the Company announced the test results from the
Berkine East No. 1 (BKE-1) well, located in the Ghadames Basin on Block 404 in
Algeria's Sahara Desert. The well tested hydrocarbons from two deeper pay
sands not penetrated at the time of the initial discovery announcement in May
1994.
The BKE-1 well flow tested at a stabilized rate of 15,275 barrels of oil per
day (BOPD) and 3.4 MMcf/d of gas through an equivalent 74/64 inch choke at
1,000 pounds per square inch (psi) flowing tubing pressure from 190 feet of
perforations in the Triassic interval. The well flowed 40.6 degree API gravity
oil with no water, H2S or CO2. The gas/oil ratio was 225 standard cubic feet
per barrel.
One of the deeper pay zones flowed at a stabilized rate of 3,693 barrels of 53
degree API gravity condensate per day plus 34.6 MMcf/d of gas through a one
inch choke at 2,155 psi flowing tubing pressure from 46 feet of perforations.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Another deeper pay zone tested at 52 barrels of 56 degree API gravity
condensate per day and 2 MMcf/d of gas through a 1/4 inch choke at 1,573 psi
flowing tubing pressure from 137 feet of perforations.
A Discovery Report is being prepared for the BKE-1 well and will be filed with
Sonatrach in November 1994. This is the first step towards development of the
field. The partners are currently planning a delineation well for the BKE-1
discovery.
Golden Trend In the third quarter of 1994, Anadarko reported 13 significant
completions from the Golden Trend, located in central Oklahoma.
Located in the Antioch Southwest Field in Garvin County, Oklahoma, the Walker
"A" #1-33 was reported flowing 94 BOPD and 805 Mcf/d of gas from a 3/4 inch
choke with flowing tubing pressure of 100 psi. Anadarko owns a 100 percent
working interest in the well. The Bristow "A" #1-34 tested at 79 BOPD and 673
Mcf/d of gas. Anadarko owns a 74 percent working interest in the well. The
Reid "C" #1-17 flow tested at 113 BOPD and 891 Mcf/d of gas from a 3/4 inch
choke with flowing tubing pressure of 160 psi. Anadarko owns a 100 percent
working interest in the well.
In Garvin County's Lindsey Southeast Field, the Bonner "A" No. 2-32 tested at
210 BOPD and 1.5 MMcf/d of gas through a 3/4 inch choke with flowing tubing
pressure of 350 psi. Anadarko owns a 100 percent working interest in this
well. The Paul "A" No. 1-34 flowed 146 BOPD with 1.4 MMcf/d of gas. Anadarko
owns a 63 percent working interest in the well. The Wall "B" No. 1-34 flowed
41 BOPD and 1.2 MMcf/d of gas. Anadarko owns a 75 percent working interest in
this well. The Simmons "B" No. 1-21 flowed 31 BOPD and 492 Mcf/d of gas.
Anadarko owns a 100 percent working interest in the well.
From the Bradley Field in Grady County, Oklahoma, the Truman #2-27 flowed 1.6
MMcf/d of gas and 105 BOPD through a 3/4 inch choke with flowing tubing
pressure of 220 psi. Anadarko owns a 24 percent working interest in the well.
The Alex "A" #1-7 flowed 1.4 MMcf/d of gas and 134 BOPD. Anadarko owns a 96
percent working interest in the well.
Also from the Bradley Field in Garvin County, Oklahoma, the Story "B" No. 1-11,
Ball "A" No. 1-20, Trioni "A" No. 1-10 and the Reid "B" No. 1-28 combined to
produce 490 BOPD and 5.6 MMcf/d of gas on initial test rates. Anadarko
operates these four wells with a working interest between 99.5 and 100 percent.
Southwest Kansas/Hugoton From the Koenig Field in Haskell County, Kansas,
the Yunker "A" No. 8 flowed 188 BOPD. Anadarko owns a 100 percent working
interest in this well.
From the Gentzler Field in Stevens County, Kansas, the Gaskill "B" No. 2
flowed 1.3 MMcf/d of gas with flowing tubing pressure of 840 psi. Anadarko
owns a 100 percent interest in the well. The Gregory "C" No. 2 flowed 1.1
MMcf/d of gas with an absolute open-flow potential of 1.9 MMcf/d of gas.
Flowing tubing pressure was 1,250 psi. Anadarko owns an 86 percent working
interest in this well.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Two additional wells were completed from the Hugoton Infill Drilling Program.
The Bressler "A" No. 1H flowed 318 Mcf/d of gas. Anadarko owns a 75 percent
working interest in the well. The U.S.A. Moore "F" No. 2H flowed 385 Mcf/d of
gas. Anadarko owns a 100 percent working interest in this well.
From the Stirrup Field in Morton County, Kansas, the Kraber "A" No. 1 flowed
2.5 MMcf/d of gas and was reported with an absolute open-flow potential of 20
MMcf/d of gas. Flowing tubing pressure was 500 psi. Anadarko has a 94 percent
working interest in the well.
Permian Basin/West Texas In the Ketchum Mountain (Clearfork) Field, located
in Irion County, Texas, significant flow rates were reported completions on the
Sugg Lease in the Ketchum Mountain Clearfork Field. Well No. 33-08 flowed 180
BOPD and 90 Mcf/d of gas through a 19/64 inch choke. Well No. 27-14 flowed 140
BOPD from a 5/16 inch choke. The Sugg No. 27-13 flowed 98 BOPD and 225 Mcf/d
of gas through a 1/4 inch choke.
Also from the Sugg Lease, the Sugg No. 33-09 flowed 85 BOPD with 80 Mcf/d of
gas, Well No. 27-11 flowed 79 BOPD, The Scott #34-15 was reported pumping 53
BOPD and the Sugg No. 27-15 flowed 155 BOPD and 175 Mcf/d of gas. Anadarko
owns a 100 percent working interest in the Sugg Lease.
Acquisition of Gas Gathering Facilities
In October 1994, the Company signed definitive agreements to purchase two
separate natural gas gathering systems in the Hugoton Field of Kansas from
Panhandle Eastern Corporation for a purchase price of $36 million. This
acquisition more than triples Anadarko's current gathering capability,
increasing from 155 MMcf/d of gas to 480 MMcf/d of gas.
The systems include the Cimmaron River System (CRS) and a portion of the
Panhandle Eastern Pipe Line (PEPL) gathering system serving the Hugoton field
area, primarily Seward, Stevens and Morton Counties in southwest Kansas and
Texas County, Oklahoma. Combined, the gathering systems include approximately
1,500 miles of pipeline in Kansas, Oklahoma and Colorado. The PEPL system
includes about 1,150 miles of pipeline and the CRS includes about 350 miles of
pipeline. These gathering facilities serve approximately 1,000 Anadarko-
operated wells and 200 third-party wells; also included are 21 compressor
stations with approximately 82,000 horsepower of compression. Currently, these
facilities move more than 325 MMcf/d of gas, with more than 75 percent from
Anadarko-operated wells.
The CRS gathering system purchase has been approved by the Kansas Corporation
Commission and the PEPL gathering system purchase is subject to Federal Energy
Regulatory Commission approval. Anadarko began operating the CRS system on
October 1, 1994 and expects to close on the PEPL system in 1995.
<PAGE>
<PAGE>
Part II. OTHER INFORMATION
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, 1994.
<PAGE>
<PAGE>
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, 1994 [MICHAEL E. ROSE]
Michael E. Rose - Senior Vice President,
Finance and Chief Financial Officer
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