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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
COMMISSION FILE NO. 1-8968
ANADARKO PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 76-0146568
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
17001 NORTHCHASE DRIVE, HOUSTON, TEXAS 77060
(ADDRESS OF EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER: (713) 875-1101
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $0.10 par value The New York Stock Exchange, Inc.
Preferred Stock Purchase Rights The New York Stock Exchange, Inc.
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 .
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Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. 'X' .
---
The aggregate market value of the voting stock held by non-affiliates of
the registrant computed using the average of the high and low sales prices at
which the stock sold on January 31, 1996 was $2,937,125,000.
The number of shares outstanding of each of the registrant's classes of
common stock as of January 31, 1996 is shown below:
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TITLE OF CLASS NUMBER OF SHARES OUTSTANDING
Common Stock, $0.10 par value 59,037,692
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PART OF
FORM 10-K DOCUMENTS INCORPORATED BY REFERENCE
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Part I Portions of the Anadarko Petroleum Corporation 1995 Annual Report to Stockholders.
Part III Portions of the Proxy Statement, dated March 18, 1996, for the Annual Meeting of
Stockholders of Anadarko Petroleum Corporation to be held April 25, 1996.
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TABLE OF CONTENTS
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PART I
Item 1. Business
General 2
Employees 2
Proved Reserves and Future Net Cash Flows 2
Exploration, Development, Acquisition and Marketing Activities 3
Volumes and Prices 3
Properties and Activities -- International 4
Properties and Activities -- United States -- Offshore 6
Properties and Activities -- United States -- Onshore 9
Drilling Programs 12
Drilling Statistics 12
Productive Wells 13
Regulatory and Legislative Developments 14
Additional Factors Affecting Business 14
Title to Properties 14
Capital Spending 14
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends 14
Item 2. Properties 15
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 16
Executive Officers of the Registrant 16
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 18
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 19
Item 8. Financial Statements and Supplementary Data 32
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 66
PART III
Item 10. Directors and Executive Officers of the Registrant 66
Item 11. Executive Compensation 66
Item 12. Security Ownership of Certain Beneficial Owners and Management 66
Item 13. Certain Relationships and Related Transactions 66
PART IV
Item 14. Exhibits and Reports on Form 8-K 67
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PART I
ITEM 1. BUSINESS
GENERAL
Anadarko Petroleum Corporation is one of the world's largest independent
oil and gas exploration and production companies with more than 526 million
energy equivalent barrels (MMEEBs) of proved energy reserves. Anadarko and its
subsidiaries are engaged in the exploration, development, production and
marketing of natural gas, crude oil, condensate and natural gas liquids (NGLs),
both domestically and internationally.
The Company's U.S. onshore drilling and production operations are focused
primarily in Kansas, Oklahoma and Texas. On Alaska's North Slope, Anadarko
maintains an active drilling program exploring for hydrocarbons. Offshore United
States in the Gulf of Mexico, Anadarko is active in both sub-salt and
conventional exploration and development. The Company owns interests in 109
lease blocks in the Gulf of Mexico. About 82 percent of the Company's reserves
are located in the United States, with approximately 19 percent of those
reserves in the Gulf of Mexico. Internationally, Anadarko is exploring for and
developing crude oil reserves in Algeria's Sahara Desert on a five million acre
exploration area. To date, the Company has recorded Algerian reserves at 92.5
million barrels (MMBbls) (net) of proved crude oil and condensate and
development plans are underway. The Company is also participating in other
projects overseas in the Sumatra Basin of Indonesia, offshore Eritrea in the Red
Sea, in Jordan's Risha-Basalt Plateau and central China.
In order to manage production more effectively and improve recovery of
natural gas reserves, at year-end 1995 the Company owned interests in 15 gas
gathering systems and seven gas processing plants in the U.S. In March 1996, the
Company acquired an additional gas gathering system that connects about 1,000
Company-operated wells.
Anadarko is a Delaware corporation organized in 1985 as the successor to
the oil and gas business of Anadarko Production Company (Production), which was
founded in 1959 as a subsidiary of PanEnergy Corporation (formerly Panhandle
Eastern Corporation (Panhandle)). Anadarko's common stock was distributed to
Panhandle stockholders in 1986. The principal subsidiaries of Anadarko include:
Anadarko Gathering Company; Anadarko Trading Company; and, Anadarko Algeria
Corporation (Anadarko Algeria).
Unless the context otherwise requires, the terms "Anadarko" or "Company"
refer to Anadarko and its subsidiaries. The Company's corporate offices are
located at 17001 Northchase Drive, Houston, Texas 77060, where the telephone
number is (713) 875-1101.
EMPLOYEES
On December 31, 1995, the Company employed 1,076 persons. The Company's
employees are not represented by any union. Relations between the Company and
its employees are considered to be satisfactory and the Company has had no work
stoppages or strikes.
PROVED RESERVES AND FUTURE NET CASH FLOWS
Proved oil and gas reserves are the estimated quantities of natural gas,
crude oil, condensate and NGLs which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Reserves are
considered proved if economical producibility is supported by either actual
production or conclusive formation tests. Reserves which can be produced
economically through application of improved recovery techniques are included in
the "proved" classification when successful testing by a pilot project or the
operation of an installed program in the reservoir provides support for the
engineering analysis on which the project or program was based.
Proved developed oil and gas reserves can be expected to be recovered
through existing wells, with existing equipment and operating methods.
As of December 31, 1995, Anadarko had proved reserves of 1.84 trillion
cubic feet (Tcf) of natural gas and 219.2 MMBbls of crude oil, condensate and
NGLs. Combined, these proved reserves are equivalent to 526.3 MMEEBs of oil or
3.16 Tcf of gas. The Company's reserves have grown significantly over the past
three years. Total reserves were equivalent to 391.1 MMEEBs at the end of 1993
and increased 22 percent to 476.4 MMEEBs at year-end 1994; reserves increased 10
percent in 1995. Reserve growth is mainly comprised
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of crude oil reserves which have grown significantly over the past three years
due primarily to the Company's exploration success in Algeria and the Gulf of
Mexico. Crude oil, condensate and NGLs comprised 20 percent of total reserves in
1993, 33 percent in 1994 and 42 percent in 1995.
Proved developed reserves comprise 70 percent of the total proved reserves
on an energy equivalent barrel (EEB) basis. As of December 31, 1995, Anadarko
had proved developed reserves of 1.74 Tcf of natural gas and 77.5 MMBbls of
crude oil, condensate and NGLs.
The Company's estimates of proved reserves and proved developed reserves,
net of royalty interests, of natural gas, crude oil, condensate and NGLs owned
at December 31, 1995, 1994 and 1993 and changes in proved reserves during the
last three years are contained in the Supplemental Information on Oil and Gas
Exploration and Production Activities (Supplemental Information) in the Anadarko
Petroleum Corporation 1995 Consolidated Financial Statements (Consolidated
Financial Statements) under Item 8 of this Form 10-K Annual Report (Form 10-K).
The Company files annual estimates of proved oil and gas reserves with the
Department of Energy, which are within five percent of these amounts.
Also contained in the Supplemental Information in the Consolidated
Financial Statements are the Company's estimates of future net cash flows,
discounted future net cash flows before income taxes and discounted future net
cash flows after income taxes from proved reserves of natural gas, crude oil,
condensate and NGLs.
The Company emphasizes the volumes of reserves are estimates which, by
their nature, are subject to revision. The estimates are made using all
available geological and reservoir data, as well as production performance data.
These estimates are reviewed annually and revised, either upward or downward, as
warranted by additional performance data.
EXPLORATION, DEVELOPMENT, ACQUISITION AND MARKETING ACTIVITIES
See narrative description on pages seven through 24 of the Anadarko
Petroleum Corporation 1995 Annual Report to Stockholders (Annual Report), which
is incorporated herein by reference, and see "Marketing Strategies", "Operating
Results" and "Acquisitions and Divestitures" under Item 7 of this Form 10-K.
VOLUMES AND PRICES
The following table shows the Company's annual production volumes. Volumes
for natural gas are in millions of cubic feet (MMcf) at a pressure base of 14.73
pounds per square inch (psi) and volumes for oil and condensate and NGLs are in
thousands of barrels (MBbls).
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1995 1994 1993
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UNITED STATES
Natural gas 171,714 173,047 158,662
Oil and condensate 7,435 7,958 7,223
Natural gas liquids 3,580 3,493 3,303
CANADA*
Natural gas -- 2,771 3,236
Oil and condensate -- 345 687
Natural gas liquids -- 19 17
TOTAL
Natural gas 171,714 175,818 161,898
Oil and condensate 7,435 8,303 7,910
Natural gas liquids 3,580 3,512 3,320
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* In December 1994, the Company sold its Canadian subsidiary.
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The following table shows the Company's annual average sales prices and
average production costs. Production costs are per EEB. For this computation,
one barrel is the energy equivalent of six thousand cubic feet (Mcf).
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1995 1994 1993
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UNITED STATES
Sales price
Natural gas (per Mcf) $ 1.42 $ 1.72 $ 1.92
Oil and condensate (per barrel) 16.52 15.06 16.35
Natural gas liquids (per gallon) 0.31 0.28 0.30
Production cost (per EEB) 3.19 3.01 3.30
CANADA*
Sales price
Natural gas (per Mcf) -- $ 1.70 $ 1.53
Oil and condensate (per barrel) -- 12.04 12.85
Natural gas liquids (per gallon) -- 0.23 0.24
Production cost (per EEB) -- 4.91 4.51
TOTAL
Sales price
Natural gas (per Mcf) $ 1.42 $ 1.72 $ 1.91
Oil and condensate (per barrel) 16.52 14.93 16.05
Natural gas liquids (per gallon) 0.31 0.28 0.30
Production cost (per EEB) 3.19 3.05 3.34
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* In December 1994, the Company sold its Canadian subsidiary.
Additional information on volumes and prices is contained in "Analysis of
Volumes and Prices" under Item 7 of this Form 10-K. Additional information on
major customers is contained in Note 10 of the Notes to Consolidated Financial
Statements under Item 8 of this Form 10-K.
PROPERTIES AND ACTIVITIES -- INTERNATIONAL
OVERVIEW In recent years, Anadarko has devoted a portion of its exploration
budget to selected international exploration projects. The Company's objective
is to add high-potential prospects to its balanced portfolio of domestic plays.
This strategy proved successful in Algeria and Indonesia and on-going studies
are being conducted in other international areas.
Foreign investment projects often offer significant economic potential for
oil and gas exploration activities. However, to achieve commercial success in
foreign exploration, companies must overcome many obstacles, such as: a
difficult operating environment, lack of an oil field service company
infrastructure, complex regulations and relationships with the host government,
and above all, the geologic risk of finding commercial hydrocarbons. In some
countries, political risk and uncertainty can complicate the situation and may
lead to delay or cancellation of a project.
There is exposure to write-offs in the event foreign exploration projects
are unsuccessful. Anadarko recorded pre-tax charges to earnings (provisions for
impairments) of $0.6 million in 1995, $3.1 million in 1994, and $6.5 million in
1993. These charges reflect costs associated with unsuccessful drilling or
related activities in Yemen, China and various other international locations,
which the Company elected not to pursue. The Company's primary international
ventures currently underway are discussed below.
ALGERIA Anadarko's largest international venture involves exploration and
development of liquid hydrocarbons in Algeria's Sahara Desert. In 1989, Anadarko
Algeria became the first U.S. firm to secure a production sharing agreement
(PSA) from SONATRACH, the national oil and gas enterprise of Algeria, under the
modern economic terms of Algeria's 1986 Hydrocarbon Law. Since 1989, Anadarko
has made five discoveries in Algeria. Development plans are underway and first
production from two fields could begin in 1997. Since the
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signing of this initial exploration agreement with Anadarko, SONATRACH has
entered into about 35 contracts with exploration and production companies around
the world. SONATRACH is the beneficial owner of 10.2 percent of Anadarko's
common stock.
Anadarko's interest in the PSA is 50 percent before participation at the
exploitation stage by SONATRACH. The Company has two partners, each with a
25-percent interest in the Algerian venture, also prior to participation by
SONATRACH; they are LASMO Oil (Algeria) Limited, a wholly-owned subsidiary of
LASMO plc, and Maersk Olie Algeriet AS, a wholly-owned subsidiary of Maersk Olie
Og Gas AS, a company in the Danish A.P. Moeller group. Under the terms of the
PSA, liquid hydrocarbons that are discovered, developed and produced will be
shared by SONATRACH, Anadarko and its two partners. SONATRACH is responsible for
its share (51 percent) of development and production costs. In addition,
Anadarko and its partners are entitled to recover a portion of exploration costs
out of production in the exploitation phase.
The PSA required Anadarko and its partners to invest $100 million over a
10-year period. This obligation was fully met in 1995 and as of December 31,
1995, the Company's total net investment in Algeria for exploration and related
activities amounted to $147 million of which about $41 million was spent in
1995. Due to the success of the project thus far, these expenditures are
currently being capitalized and no provision for loss or impairment has been
made. To date, the Company has elected not to insure its investment in Algeria.
See Additional Factors Affecting Business under Item 7 of this Form 10-K and
Note 10 of the Notes to Consolidated Financial Statements under Item 8 of this
Form 10-K.
The Company has budgeted about $150 million (net) of capital spending for
further exploration and delineation drilling and development work in Algeria
during 1996. During 1996, the Company expects that Commerciality Reports will be
filed requesting Exploitation Licenses (ELs) for the Hassi Berkine (HBN) and the
Hassi Berkine South (HBNS) Fields based on existing data and the result of the
delineation well currently drilling. The estimated cost of full development of
the HBN and HBNS Fields is $1.2 billion, which would be shared by all partners
under the terms of the PSA and the joint operating agreement between partners.
For additional information, see pages nine through 13 of the annual report
narrative and "Marketing Strategies" and "Properties and Activities" under Item
7 of the Form 10-K.
In the first half of 1996, the partners are preparing for increased
drilling activities on Blocks 404 and 208, adding an additional rig for field
delineation and exploration work. In January 1996, a drilling rig spudded an
exploration well, named Takouazet South No. 1 (TAKS-1), on Block 245, one of the
two unexplored exploration blocks. This is the southernmost block in the
exploration area owned by the partners.
The PSA originally specified an exploration area totaling 5.1 million
acres. In 1994, Anadarko and its partners relinquished about 25 percent of this
area, pursuant to the requirements of the PSA after the end of the first phase
of the total exploration program. This left Anadarko and its partners
approximately 3.8 million acres of the original exploration area for continued
exploration drilling in the second phase which extends through 1997. During
1994, the Company acquired a minority interest in a PSA covering two additional
blocks in the same region, which are operated by BHP Petroleum (Algerie) Inc. An
exploration program is already underway on these two blocks, which contain about
1.2 million acres (net). In 1996, BHP and partners plan a 1,600 kilometer
seismic acquisition program and a geological study of potential Triassic pay
zones. At the end of 1995, the Company's total gross acreage in Algeria was
still about five million acres.
The current political unrest in Algeria has been the subject of numerous
media reports. Although the Company was encouraged by the democratic elections
held in November 1995, Anadarko is closely monitoring the situation and has
taken reasonable and prudent steps to ensure the safety of employees working in
the remote regions of the Sahara Desert. Anadarko is presently unable to predict
with certainty any effect the current situation may have on activity planned for
1996 and beyond. However, the situation has not had any material effect to date
on the Company's operations.
INDONESIA In 1995, Anadarko and partners drilled two successful exploration
wells and two delineation wells on the Jabung Block in the Jambi Province of
Central Sumatra Indonesia. The Jabung Block, which is located on the island of
Sumatra in the northernmost part of the South Sumatra Basin, covers an area of
two million acres.
In the first quarter of 1995, the North Geragai No. 1 exploration well
tested 5,100 barrels of oil per day (BOPD), 30 million cubic feet per day
(MMcf/d) of gas and 350 barrels of condensate per day (BCPD) from six zones. A
delineation well -- the North Geragai No. 2 -- was drilled one mile southeast of
the No. 1
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well and tested 2,967 BOPD, 10.9 MMcf/d of gas and 115 BCPD from multiple zones.
Results from a third well were announced in the first quarter of 1996, with the
well flowing 2,800 BOPD and 2.4 MMcf/d of gas. The North Geragai No. 4 well
began drilling in February 1996.
A second exploration prospect -- the Northeast Betara No. 1 -- was drilled
about 25 miles northwest of the North Geragai Field in 1995. The well
encountered 130 feet of hydrocarbon bearing sands and flowed at a combined rate
of 420 BCPD and 22 MMcf/d of gas, of which about 55 percent was carbon dioxide.
Further evaluation is required and the Northeast Betara No. 2 should begin
drilling in March 1996.
Anadarko, operator Santa Fe Energy Resources (Jabung), Ltd., a wholly-owned
subsidiary of Santa Fe Energy Resources, Inc., and Kerr-McGee Sumatra, Ltd., a
wholly-owned subsidiary of Kerr-McGee Corporation, are currently discussing
commerciality of the North Geragai Field. If proven commercial, a Plan of
Development should be submitted to Pertamina, the state oil company of
Indonesia, in the first half of 1996 and oil production could begin in early
1997.
The partners have a production sharing contract which includes a $15
million commitment to exploration activities during the first three years. The
partners fully met this obligation in 1995 and as of December 31, 1995, the
Company's total net investment in Indonesia amounted to $11 million. Due to the
success of the project thus far, these expenditures are currently being
capitalized and no provision for loss or impairment has been made.
ERITREA In September 1995, Anadarko signed an agreement with the government of
the State of Eritrea for offshore exploration in the Red Sea. Located on the
east coast of Africa, Eritrea officially became an independent nation in 1993
following a 30-year war for independence from Ethiopia. Anadarko, under the
terms of the agreement, plans to invest up to $29 million over the next several
years. The Company is currently conducting a high-density aerial gravity and
magnetic survey over the 6.7 million acre exploration area, known as the Zula
Block. The Company has a 100-percent interest in the project, but may take on
partners.
CHINA In 1994, Anadarko signed a joint study agreement with Chengdu Huachuan
Petroleum and Natural Gas Exploration and Development Corporation. The one year
agreement allowed for a complete geological, geophysical and engineering
evaluation of two areas, totaling about two million acres, within the Sichuan
Basin in China's Sichuan Province. Depending on the results of this study,
Anadarko could begin negotiations on a production sharing contract in 1996. The
Company has a 100-percent interest in the project, but may take on partners.
JORDAN On March 5, 1996, Anadarko and the Natural Resources Authority of the
Hashemite Kingdom of Jordan signed a PSA. The agreement will be presented to the
Parliament for final approval. The PSA covers approximately 4.2 million acres
and the Company has committed to spend at least $5 million during the first two
and one-half years of the exploration period. Anadarko plans to drill one
stratigraphic test well during 1996 to look for signs of a working petroleum
system. The Company has a 100-percent interest in the project, but may take on
partners.
CANADA During 1994, Anadarko sold all of its interests in Canada in four
separate transactions. Proved Canadian reserves at the end of 1993 were about 10
MMEEBs, which was less than three percent of Anadarko's total proved reserves.
Proceeds from the sales were about $58 million.
PROPERTIES AND ACTIVITIES -- UNITED STATES -- OFFSHORE
ACREAGE At year-end 1995, Anadarko owned an average 48 percent working interest
in 103 lease blocks and held 47,000 net acres in developed properties and
190,000 net acres in undeveloped properties offshore.
The accompanying map illustrates the Company's exploratory and development
net acres, number of producing net wells and other data relevant to its offshore
properties.
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OFFSHORE MAP (GRAPHIC MATERIAL OMITTED)
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NET NET NET
DEVELOPED UNDEVELOPED PRODUCING
ACRES ACRES WELLS
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OFFSHORE:
United States
Florida -- 39,826 --
Louisiana 18,965 143,845 22
Mississippi -- 2,194 --
Texas 27,719 4,241 22
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OFFSHORE EXPLORATION Anadarko is active in exploration projects in both the
conventional and sub-salt plays in the Gulf of Mexico.
In 1995, Anadarko conducted extensive data analysis on its list of 20
sub-salt prospects located on 40 lease blocks. The Company invested about $8
million on seismic analysis and both upgraded and downgraded prospects based on
new information. In December 1995, three sub-salt prospects were spudded in the
Gulf of Mexico. The wells include: Alexandrite, located at Ship Shoal South
Addition 337/338, Phillips (operator) Petroleum Company (Phillips) and Anadarko
each hold a 37.5-percent working interest, Amoco holds a 25-percent interest;
Agate, located at Ship Shoal South Addition 361, Phillips (operator) and
Anadarko each hold a 50-percent working interest; Monazite, located at Vermilion
South Addition 357/375/376, Anadarko (operator), Broken Hill Proprietary and
Phillips each hold a 33.33-percent working interest. In the first quarter of
1996, Anadarko and partners Louisiana Land & Exploration (operator) and Agip
spudded a sub-salt exploration well at South Timbalier South Addition 231.
Results from these exploration prospects should be known in mid-1996. The
Company expects to drill two additional sub-salt prospects in 1996 and continue
evaluation of its prospects.
In 1994, the Company drilled two sub-salt exploration wells in the Gulf of
Mexico. In July, Anadarko and partner Phillips (operator) announced results from
the Teak exploratory well, located on South Timbalier South Addition 260. The
discovery well tested more than 4,400 BOPD and 7.7 MMcf/d of gas from several
zones. The discovery was further analyzed in 1995 and the partners may drill a
delineation well in late 1996 or early 1997. Phillips and Anadarko each have a
50-percent working interest in the well. The Mesquite exploratory well, located
at Vermilion 349, was plugged and abandoned in June 1994 after finding no
commercial hydrocarbons. Anadarko (operator) and Phillips each have a 50-percent
working interest in the well.
In March 1994, Anadarko invested $72 million (net) as high bidder on 26
offshore lease blocks at the Minerals Management Service Offshore Lease Sale No.
147. All but two of the blocks were related to sub-salt exploration projects.
These blocks were studied extensively in 1995 to determine the location of the
three sub-salt wells that are currently drilling and the wells in the 1996
drilling program.
The Company's three conventional exploration wells in the Gulf of Mexico in
1995 were dry holes.
OFFSHORE DEVELOPMENT In 1995, the Company's largest offshore development
venture was the Mahogany project, located at Ship Shoal 349/359, about 80 miles
off the coast of Louisiana. In April 1995, Phillips (operator), Anadarko and
Amoco declared the Field commercial, making this the industry's first commercial
sub-salt oil development. Fabrication of the production platform is underway at
Aker-Gulf Marine on the Texas Gulf Coast. The platform will be capable of
processing 45,000 BOPD and 100 MMcf/d of gas and is scheduled for installation
in the third quarter of 1996. Production is expected to commence in late 1996
and pipelines are currently being installed that will be capable of connecting
the platform to multiple interstate pipelines. Since the Field was discovered in
September 1993, the partners have drilled two successful delineation wells at
Mahogany. A third delineation well -- Mahogany No. 4 -- was drilling when this
report was released for printing. Phillips and Anadarko each own a 37.5-percent
working interest in the project. Amoco holds a 25-percent working interest.
In 1995, Anadarko participated in four successful development wells in the
Gulf of Mexico. The wells were completed and hooked to existing infrastructure
for production. Additional development work continued in 1995 on the four blocks
in the Matagorda Island Field, initially discovered in 1980. In 1995, Anadarko's
net production from the Matagorda Island Field averaged 72 MMcf/d of gas (gross)
and 800 BCPD. Anadarko has a 37.5 percent working interest in this Field.
Anadarko's offshore gas production volumes increased in 1995 as a result of
two production platforms installed in the Gulf of Mexico in late 1994. A
platform was installed in August 1994 at High Island A-376, located 150 miles
offshore Louisiana. Net production from the High Island 376 Field in 1995
averaged 635 BOPD and 5.6 MMcf/d of gas. Anadarko is operator with a
33.8-percent working interest. Production from the second platform, located at
East Cameron 157, averaged 46 MMcf/d of gas and 900 BCPD. Production from the
platform commenced in the second quarter of 1995. Anadarko is operator and has a
100 percent working interest.
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PROPERTIES AND ACTIVITIES -- UNITED STATES -- ONSHORE
ACREAGE Approximately 51 percent of the Company's 1,975,000 gross (578,000 net)
onshore undeveloped acres in the United States at year-end 1995 lie within three
producing provinces: the Anadarko Basin of Kansas and Oklahoma, the Gulf Coast
region and the Permian Basin of West Texas. In addition, the Company has 172,000
gross (29,000 net) undeveloped acres onshore in Alaska. As of December 31, 1995,
approximately 96 percent of the Company's 1,830,000 gross (842,000 net)
developed acres onshore in the United States are located within these same
provinces.
The accompanying map illustrates by state Anadarko's developed and
undeveloped net acres, number of producing net wells and other data relevant to
its onshore oil and gas operations in the United States.
HUGOTON Anadarko's single largest asset is its reserves in the Kansas Hugoton
Field, a shallow natural gas field. In 1995, Anadarko drilled 24 wells in this
Field. Currently, Anadarko owns 354,700 net lease acres in the Field with 766
producing natural gas wells. Anadarko's net production from the Field averaged
141 MMcf/d in 1995.
Anadarko's operations in this area have improved through acquisitions,
property exchanges and development drilling. Recovery of reserves in the deeper
oil fields is enhanced through waterflood operations. The Company has been
active in waterflood operations for more than 30 years.
PERMIAN BASIN About half of the Company's oil production comes from the Permian
Basin of West Texas and eastern New Mexico where the Company's major focus is
waterflood operations. Anadarko has been acquiring properties to complement and
enhance operations in this area. In the Permian Basin, Anadarko holds 140,000
net lease acres and operates 2,126 active wells. The Company's oil production
from the Permian Basin in 1995 was 11,500 BOPD, up slightly from about 11,000
BOPD in 1994. Production in 1996 is expected to decrease slightly due to
property sales in 1995.
GOLDEN TREND In central Oklahoma's Golden Trend area, Anadarko owns interest in
245 wells, of which 166 are Company-operated. Anadarko holds about 18,500 (net)
undeveloped lease acres and 16,300 (net) developed lease acres in the area. In
1995, the Company's activity in this area decreased due to lower gas prices. The
Company drilled eight wells in the area in 1995. Gas production from the Golden
Trend area was 19 MMcf/d of gas in 1995, a decrease of 17 percent from 1994. In
1995, oil production was 560 BOPD, a decrease of 20 percent compared to 1994.
ALASKA Anadarko has maintained an active oil exploration effort on the North
Slope of Alaska since 1992. Anadarko, ARCO Alaska (operator) and Union Texas
Petroleum drilled two wells and three sidetracks in the first quarter of 1995 in
the Colville River Delta, west of Prudhoe Bay. Encouraged by the results of
these wells, the partners are planning to drill up to six delineation wells in
this area in 1996. The results of this drilling program and a new seismic
acquisition program currently being conducted will be used to determine the
field's commerciality. The partners are currently working to reduce drilling and
field development costs -- two factors that could help make this play
commercial. Anadarko owns a 22-percent working interest in this project.
9
<PAGE> 11
COAL-BED METHANE Since 1989, the Company has been exploring coal-bed methane
acreage in Colorado, Wyoming and Utah. In 1995, the Company drilled one
exploratory well in the Grimes Wash Field, located in Emory County, Utah.
Anadarko is planning to drill three development wells in the Grimes Wash Field
in 1996. In August 1994, Anadarko acquired 24 producing coal-bed methane wells,
a gas pipeline and 16,300 gross acres in Carbon County, Utah, from Pacific Gas
and Electric Resources. Known as the Castlegate Field, the wells are near Price,
Utah. At the time of the purchase, the wells were producing 1.4 MMcf/d gas. The
wells are dewatering and production has increased about 110 percent to 3 MMcf/d
of gas. The Company is planning to drill one development well in this Field in
1996. The Company operates another coal-bed methane pilot study in the Helper
Field, also in Utah.
YEGUA During 1995, Anadarko drilled two wells in the Texas Gulf Coast's Yegua
play where the Company holds 90,000 gross lease acres. Since entering the play
in 1991, the Company has drilled or participated in 20 wildcat wells and five
development wells. In 1995, the Company shot its first onshore exploration
three-dimensional seismic to help determine locations for future exploration and
development wells. Net production from the Yegua play was 5.2 MMcf/d of gas and
161 BCPD in 1995.
GEOTHERMAL Anadarko has maintained an active interest in geothermal energy for
the past 10 years. The Company has been working to develop a commercial
geothermal electric power generation project at the site of its Pueblo Valley
discovery in southeastern Oregon. In April 1995, Anadarko signed a Memorandum of
Understanding with Portland General Electric for a power sales agreement. At the
time this report was printed, Anadarko was evaluating future action regarding
this project.
In June 1995, the prospect at Salt Wells, Nevada was dropped due to the
lack of a market for geothermal power in Nevada. One production well and several
observation wells were plugged and abandoned. The Glass Mountain prospect in
California is being held pending development of a market.
Anadarko's geothermal leasehold at year-end 1995 was 166,500 net acres. The
Company recorded a charge of $2.0 million in the fourth quarter of 1995
associated with these activities.
GAS GATHERING SYSTEMS Anadarko owns and operates five gas gathering systems in
the nation's mid-continent area: the Antioch Gathering System in the Southwest
Antioch Field of Oklahoma; the Hemphill Gathering System, located in Hemphill
County, Texas; the Hugoton Gathering System in southwest Kansas; the Cimarron
River System (CRS) in southwest Kansas; and the Sneed System in the West
Panhandle Field of Texas.
In late 1994, Anadarko signed agreements with Panhandle Eastern Pipe Line
Company (PEPL), a subsidiary of PanEnergy Corporation, to acquire two separate
natural gas gathering systems in the Liberal, Kansas, area. The Company acquired
the CRS system in October 1994. The Company acquired the PEPL gathering assets
in March 1996. The purchase price of these two systems is about $34 million. In
December 1995, the Federal Energy Regulatory Commission (FERC) approved Anadarko
Gathering Company's acquisition of the PEPL assets and determined that they will
not be subject to FERC jurisdiction. These acquisitions triple the Company's gas
gathering capability. In addition to these systems, Anadarko owns interests in
10 other smaller systems. Including the 1996 acquisition, these 16 systems have
approximately 2,100 miles of pipeline connecting nearly 1,900 wells and over 480
MMcf/d of gas gathering capability.
10
<PAGE> 12
11
ONSHORE MAP (GRAPHIC MATERIAL OMITTED)
<TABLE>
<CAPTION>
NET NET NET
DEVELOPED UNDEVELOPED PRODUCING
ACRES ACRES WELLS
--------- ----------- ---------
<S> <C> <C> <C>
ONSHORE:
United States
Alaska* -- 28,777 --
Colorado 18,393 40,038 2
Kansas* 366,999 65,650 1,435
Louisiana 699 47 6
Mississippi 223 61,293 --
Montana 1,996 330 --
Nebraska 273 319 --
Nevada -- 147,070 --
New Mexico 19,999 2,762 65
North Dakota 40 80 --
Oklahoma* 225,662 35,469 833
Texas* 183,909 85,021 1,677
Utah* 11,663 75,219 32
Wyoming 12,175 35,888 28
United States -- Geothermal
California -- 113,518 --
Nevada -- 5,143 --
Oregon -- 47,867 --
</TABLE>
OFFICE LOCATIONS:
United States
Houston, Texas
Midland, Texas
Oklahoma City, Oklahoma
Liberal, Kansas
Santa Rosa, California
- ---------------
* Drilling activities were conducted in these areas in 1995.
<PAGE> 13
GAS PROCESSING PLANTS Anadarko owns and operates two gas processing plants and
has interests in five other plants. Most of these plants are located within the
Company's major areas of gas production. In 1994, the Company sold its interests
in six plants and closed four plants. In most cases, the Company was able to
arrange to have the gas processed more efficiently in third-party processing
facilities. The Company-operated plants are integrated with the gas gathering
systems described previously.
The following table sets forth the average daily gas throughput and NGLs
production for the three years ended December 31, 1995. The NGLs production
shown in the table below includes production from Company processing as well as
third party processing.
<TABLE>
<CAPTION>
THROUGHPUT AND PRODUCTION
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1995 1994 1993
----- ------ ------
<S> <C> <C> <C>
Gas throughput (MMcf/d) 64 80 98
NGLs production (Barrels per day) 9,530 6,900 7,040
</TABLE>
WATER SUPPLY SYSTEM In October 1995, Anadarko purchased the West Texas Water
Supply System (WTWS) and the Great Plains Water System (GPWS) in a combined
transaction for $9.5 million. The WTWS supplies brackish water to waterfloods
throughout Ector County, Texas. Current throughput is about 150,000 barrels of
water per day (BWPD), of which Anadarko purchases 40,000 BWPD. The GPWS provides
fresh water to waterfloods, gas plants and municipalities in Andrews and Ector
Counties. Since Anadarko purchases minimal volumes from GPWS, the Company sold
its interest for $2.8 million in February 1996.
DRILLING PROGRAMS
The Company's 1995 drilling program again focused on known oil and gas
provinces onshore in North America, as well as offshore in the Gulf of Mexico.
Onshore activity was concentrated in Kansas, Oklahoma, the Texas Panhandle and
the Permian Basin of west Texas. Exploration activity consisted of two wells
onshore in the United States, seven wells offshore United States, five wells in
Algeria and three wells in Indonesia. Development activity included 234 wells
onshore United States and seven wells offshore United States.
DRILLING STATISTICS
The following table shows the results of the oil and gas wells drilled and
tested:
<TABLE>
<CAPTION>
NET EXPLORATORY NET DEVELOPMENT
----------------------------- ------------------------------
PRODUCTIVE DRY HOLES TOTAL PRODUCTIVE DRY HOLES TOTAL TOTAL
---------- --------- ----- ---------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
1995
United States 2.3 2.9 5.2 159.9 40.1 200.0 205.2
Algeria 2.0 0.5 2.5 0.0 0.0 0.0 2.5
Indonesia 1.0 0.0 1.0 0.0 0.0 0.0 1.0
---- ---- ---- ----- ---- ----- -----
Total 5.3 3.4 8.7 159.9 40.1 200.0 208.7
---- ---- ---- ----- ---- ----- -----
1994
United States 6.9 8.1 15.0 162.5 16.8 179.3 194.3
Canada 1.0 1.2 2.2 2.5 0.5 3.0 5.2
Algeria 2.0 0.8 2.8 0.0 0.0 0.0 2.8
---- ---- ---- ----- ---- ----- -----
Total 9.9 10.1 20.0 165.0 17.3 182.3 202.3
---- ---- ---- ----- ---- ----- -----
1993
United States 11.4 6.2 17.6 100.5 10.4 110.9 128.5
Canada 0.0 1.0 1.0 0.5 3.0 3.5 4.5
Algeria 0.5 0.5 1.0 0.0 0.0 0.0 1.0
---- ---- ---- ----- ---- ----- -----
Total 11.9 7.7 19.6 101.0 13.4 114.4 134.0
---- ---- ---- ----- ---- ----- -----
</TABLE>
12
<PAGE> 14
The following table shows the number of wells in the process of drilling or
in active completion stages and the number of wells suspended or waiting on
completion as of December 31, 1995:
<TABLE>
<CAPTION>
UNITED STATES ALGERIA INDONESIA TOTAL
-------------- ------------- -------------- --------------
GROSS NET GROSS NET GROSS NET GROSS NET
----- ---- ----- --- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WELLS IN THE PROCESS OF
DRILLING OR ACTIVE
COMPLETION
Exploration 4 1.4 0 0.0 1 0.3 5 1.7
Development 17 14.5 0 0.0 0 0.0 17 14.5
WELLS SUSPENDED OR WAITING ON
COMPLETION
Exploration 4 1.6 0 0.0 0 0.0 4 1.6
Development 20 14.8 0 0.0 0 0.0 20 14.8
</TABLE>
PRODUCTIVE WELLS
As of December 31, 1995, the Company owned productive wells as follows:
<TABLE>
<CAPTION>
UNITED STATES ALGERIA INDONESIA TOTAL
---------------- -------------- ---------------- ----------------
GROSS NET GROSS NET GROSS NET GROSS NET
----- ------ ----- ---- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oil wells* 4,523 2,247 9 5 2 1 4,534 2,253
Gas wells* 2,735 1,875 0 0 1 0 2,736 1,875
----- ------ ----- ---- ----- ------ ----- ------
Total 7,258 4,122 9 5 3 1 7,270 4,128
----- ------ ----- ---- ----- ------ ----- ------
- ---------------
* Includes wells containing multiple completions
Oil wells 74 25.8 -- -- -- -- 74 25.8
Gas wells 165 71.6 -- -- -- -- 165 71.6
</TABLE>
13
<PAGE> 15
REGULATORY AND LEGISLATIVE DEVELOPMENTS
See "Regulatory and Legislative Developments" under Item 7 of this Form
10-K.
ADDITIONAL FACTORS AFFECTING BUSINESS
See "Additional Factors Affecting Business" under Item 7 of this Form 10-K.
TITLE TO PROPERTIES
As is customary in the oil and gas industry, only a preliminary title
examination is conducted at the time properties believed to be suitable for
drilling operations are acquired by the Company. Prior to the commencement of
drilling operations, a thorough title examination of the drill site tract is
conducted and curative work is performed with respect to significant defects, if
any, before proceeding with operations. A thorough title examination has been
performed with respect to substantially all leasehold producing properties owned
by the Company. The Company believes the title to its leasehold properties is
good and defensible in accordance with standards generally acceptable in the oil
and gas industry subject to such exceptions which, in the opinion of counsel
employed in the various areas in which the Company has conducted exploration
activities, are not so material as to detract substantially from the use of such
properties. The leasehold properties owned by the Company are subject to
royalty, overriding royalty and other outstanding interests customary in the
industry. The properties may be subject to burdens such as liens incident to
operating agreements and current taxes, development obligations under oil and
gas leases and other encumbrances, easements and restrictions. The Company does
not believe any of these burdens will materially interfere with its use of these
properties.
CAPITAL SPENDING
See "Capital Expenditures, Liquidity and Long-Term Debt" under Item 7 of
this Form 10-K.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The Company's ratios of earnings to fixed charges for the years ended
December 31, 1995, 1994 and 1993 were 1.24, 2.23 and 2.68, respectively. These
ratios were computed by dividing earnings by fixed charges. For this purpose,
earnings include income before income taxes and fixed charges. Fixed charges
include interest and amortization of debt expenses and the estimated interest
component of rentals.
During the three years ended December 31, 1995, there were no shares of
preferred stock outstanding. Accordingly, the ratio of earnings to combined
fixed charges and preferred stock dividends for each of the three years is the
same as the ratio of earnings to fixed charges.
14
<PAGE> 16
ITEM 2. PROPERTIES
See information appearing under Item 1 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
KANSAS AD VALOREM TAX The Natural Gas Policy Act of 1978 (NGPA) allows a
"severance, production or similar" tax to be included as an add-on, over and
above the maximum lawful price for natural gas. Based on the FERC ruling that
the Kansas ad valorem tax was such a tax, the Company collected the Kansas ad
valorem tax in addition to the otherwise maximum lawful price. FERC's ruling was
appealed to the United States Court of Appeals for the District of Columbia
(D.C. Circuit), which held in June 1988 that FERC failed to provide a reasoned
basis for its findings and remanded the case to FERC for further consideration.
On December 1, 1993, FERC issued an order reversing its prior ruling, but
limiting the effect of its decision to Kansas ad valorem taxes for sales made on
or after June 28, 1988. FERC clarified the effective date of its decision by an
order dated May 19, 1994. The clarification provided that the June 28, 1988
effective date applies to tax bills rendered after that date, not sales made on
or after that date. Based on Anadarko's interpretation of FERC's orders,
$700,000 (pre-tax) was charged against income in 1994, in addition to $130,000
(pre-tax) charged against income in 1993. Numerous parties have filed appeals of
FERC's action in the D.C. Circuit. Anadarko, together with other natural gas
producers, has challenged FERC's orders on two grounds: (1) that the Kansas ad
valorem tax, properly understood, does qualify for reimbursement under the NGPA;
and (2) FERC's ruling should, in any event, have been applied prospectively.
Other parties have separately challenged FERC's orders on the grounds that
FERC's ruling should have been applied retroactively to December 1, 1978, the
date of the enactment of the NGPA and producers should have been required to pay
refunds accordingly. The Company anticipates a decision in 1996 and is unable to
predict the final outcome of this matter.
HERITAGE RESOURCES, INC. LITIGATION Pursuant to an order of the 162nd Judicial
District Court for Dallas County, Texas, dated January 29, 1988, requiring all
owners of interests in certain properties in Winkler County, Texas, to be joined
as parties Plaintiff or parties Defendant, Anadarko has entered, as a party
Plaintiff with certain other parties, a suit initially filed against Heritage
Resources, Inc. (Heritage) by Tribal Drilling Company. The Plaintiffs, among
other things, seek to have Heritage removed as operator of a well in which
Plaintiffs own interests. The Defendants have asserted counterclaims against
Anadarko and other Plaintiffs alleging that, among other things, the assertions
of the Plaintiffs are frivolous and were made in bad faith and the Plaintiffs
breached the joint operating agreements. In a companion case tried in Winkler
County, Texas, to which Anadarko is not a party, a jury found in favor of
certain of the defendants in the Dallas litigation and against some co-working
interest owners and Plaintiffs involved in the Dallas litigation. The issues
involved in this companion case were virtually identical to those pending in the
Dallas County case. An appeal has been taken from the Winkler County judgment
and oral arguments were heard at the El Paso Court of Appeals in November 1995.
The judgment, even if the appeal is unsuccessful, is not binding on Anadarko
because Anadarko was not a party to the Winkler County lawsuit. The trial is
scheduled to begin on May 6, 1996. While the outcome of the litigation cannot be
predicted, Anadarko's management believes that any recovery on the counterclaims
in a material amount is remote.
The Company is subject to other legal proceedings, claims and liabilities
which arise in the ordinary course of its business. In the opinion of the
Company, the liability with respect to these actions will not have a material
effect on the Company.
15
<PAGE> 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
AGE AT END
NAME OF 1996 POSITION
---- ---------- --------
<S> <C> <C>
Robert J. Allison, Jr. 57 Chairman of the Board, President and Chief Executive
Officer
Charles G. Manley 52 Senior Vice President, Administration
Michael E. Rose 49 Senior Vice President, Finance and Chief Financial
Officer
John N. Seitz 45 Senior Vice President, Exploration
Charles K. Abernathy 53 Vice President, Operations, Offshore
Rex Alman III 45 Vice President, Operations, U.S. Onshore
James R. Larson 46 Vice President and Controller
Richard A. Lewis 52 Vice President of Human Resources
J. Stephen Martin 40 Vice President and General Counsel
Albert L. Richey 47 Vice President and Treasurer
Richard J. Sharples 49 Vice President, Marketing
Bruce H. Stover 47 Vice President, Acquisitions
William D. Sullivan 40 Vice President, Algeria
A. Paul Taylor, Jr. 47 Vice President, Corporate Communications
</TABLE>
Mr. Allison joined Production in 1973 as Vice President-Operations, was
named President in 1976 and was President and Chief Executive Officer from 1979
until 1985 when he assumed the position of President and Chief Executive Officer
of Anadarko. Mr. Allison was named Chairman and Chief Executive Officer
effective October 1986. In January 1993, he was elected the additional position
of President.
Mr. Manley was employed by Production in 1976 and was Vice President,
Administration and Employee Relations, from 1977 until August 1985. He held that
position with Anadarko until January 1993 when he was named Senior Vice
President, Administration.
Mr. Rose joined Production as Chief Accountant in January 1978 and became
Vice President and Controller in May 1981. He held that position at Anadarko
from August 1985 until he was named Vice President, Finance, in October 1986. In
January 1993, he was named Senior Vice President, Finance and Chief Financial
Officer.
Mr. Seitz joined Production in 1977 as a Petroleum Geologist. He served as
Manager of Exploration and Chief Geologist before becoming General Manager,
Exploration, of Anadarko in June 1987. He was named Vice President, Exploration
and Production Operations, in October 1989 and Vice President and General
Manager, Houston Region, in February 1990. He was named Vice President,
Exploration, International/Gulf of Mexico, in January 1992 and Vice President,
Exploration in January 1993. He held that position with Anadarko until October
1995 when he was named Senior Vice President of Exploration.
Mr. Abernathy joined Production in January 1975 as a Senior Petroleum
Engineer. He served as the Southern Region's Operations Manager before becoming
Manager, Exploration and Production Operations, of Anadarko in June 1987. He was
named Vice President, Exploration and Production Operations, in July 1987 and
Vice President and General Manager, International, in October 1989. He was named
Vice President Operations, International/Offshore, in January 1992 and held that
position until October 1995 when he was named Vice President, Operations,
Offshore.
Mr. Alman joined Production in 1976 as an Evaluation Engineer. He served as
Manager, Production and Planning, prior to being named Manager, Exploration and
Production Operations, in February 1990. He was named Vice President,
Exploration and Production Operations, in April 1990 and was named Vice
President, Operations, U.S. Onshore, in January 1992. In January 1993, he was
named Vice President, Engineering and held that position until he was named Vice
President, Operations, U.S. Onshore, in October 1995.
Mr. Larson was named Vice President and Controller in October 1995. He
joined Production in 1983 and has served as the Company's Controller since 1986.
16
<PAGE> 18
Mr. Lewis was named Vice President of Human Resources in October 1995. He
joined Production in 1985 as Manager of Employee Relations. Prior to Anadarko,
Mr. Lewis worked for Murphy Oil Corporation as Manager of Employee Relations.
Mr. Martin was named Vice President and General Counsel in October 1995.
Mr. Martin was employed by Anadarko in June 1987 and was promoted to Senior
Attorney in 1989, General Attorney in 1994 and General Counsel in 1995.
Mr. Richey was named Vice President and Treasurer in October 1995. He
joined Anadarko in June 1987 as Manager of Finance and was named Treasurer in
July 1987. Prior to Anadarko, Mr. Richey worked at Sandefer Oil and Gas as Vice
President and Treasurer from 1983-85.
Mr. Sharples was employed by Anadarko and named Vice President, Marketing,
in March 1993. Prior to coming to Anadarko, he held a vice president's position
in marketing with Maxus Energy Corporation from October 1984 until March 1993.
Mr. Stover joined Anadarko in 1980 as Chief Engineer and was named General
Manager, Special Projects in 1987. He assumed the position of President and
General Manager, Anadarko Algeria Corporation, in 1989. In January 1993, he was
named Vice President, Acquisitions.
Mr. Sullivan joined the Company in 1981 as Senior Reservoir Engineer. He
held several positions in engineering and operations before being named Manager,
Acquisitions in 1987. In 1991, he was named Vice President and General Manager,
Anadarko China Company. In 1993, he was named Vice President Operations, U. S.
Onshore. He held that position with Anadarko until October 1995 when he was
named Vice President, Algeria.
Mr. Taylor was employed by Anadarko in October 1986 as Director, Corporate
Communications, and became Vice President, Corporate Communications, in January
1987.
All officers of Anadarko are elected in April of each year at an
organizational meeting of the Board of Directors to hold office until their
successors are duly elected and shall have qualified. There are no family
relationships between any directors or executive officers of Anadarko.
17
<PAGE> 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information on the market price and cash dividends declared per share of
common stock is included in the Stockholders' Information in the Annual Report,
which is incorporated herein by reference.
As of December 31, 1995, there were approximately 7,100 direct holders of
Anadarko common stock. The following table sets forth the amount of dividends
paid on Anadarko common stock during the two years ended December 31, 1995.
<TABLE>
<CAPTION>
First Second Third Fourth
thousands Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1995 $4,417 $4,496 $4,501 $4,278
1994 $4,403 $4,408 $4,411 $4,413
</TABLE>
The amount of future dividends will depend on earnings, financial
condition, capital requirements and other factors, and will be determined by the
Directors on a quarterly basis.
For additional information, see "Dividends" under Item 7 and Note 7 of the
Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
See "Summary Financial Data" in the Annual Report, which is incorporated
herein by reference.
18
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL RESULTS
OVERVIEW Anadarko's net income and revenues declined significantly in 1995
compared to 1994 due primarily to lower prices for natural gas and lower
production volumes of crude oil following sales of producing properties in 1994
and normal depletion. Over the past three years, revenues have declined by about
10 percent and net income (before cumulative effect of changes in accounting
principles) has declined by about 47 percent for the same reasons. These
declines were partially offset by modestly lower levels of costs and expenses
over the past three years.
NET INCOME AND REVENUES Anadarko's net income for 1995 was $21.0 million (36
cents per share). This compares to Anadarko's 1994 net income (after a special
charge) of $41.1 million (70 cents per share). The significant decline in
earnings is due to weak gas prices throughout the first nine months of 1995 and
lower oil production volumes due to property sales in 1994. In 1993, Anadarko's
net income before the cumulative effect of changes in accounting principles was
$40.0 million (70 cents per share). Including the cumulative effect of two
accounting changes, Anadarko's net income for 1993 was $117.4 million ($2.05 per
share).
Revenues for 1995 were $434.0 million, a decrease of 10 percent compared to
both 1994 revenues of $482.5 and 1993 revenues of $482.0 million. Revenues in
1994 were slightly above 1993 revenues and reflected record production and sales
volumes for natural gas, crude oil, condensate and natural gas liquids (NGLs),
offset by lower prices.
The Company's 1994 net income was impacted by the sale for $58 million of
the Company's wholly-owned subsidiary, Anadarko Petroleum of Canada Ltd. Stated
without the effect of a special charge of $6.6 million (after taxes) related to
the sale, 1994 net income was $47.7 million (81 cents per share). The charge is
primarily due to foreign currency translation losses that had been incurred over
the life of the investment and previously accounted for on the Company's balance
sheet.
During 1993, Anadarko's net income was affected by the items discussed
below.
(1) Implementation in the first quarter of Statement of Financial
Accounting Standards (SFAS) No. 106 which required a change in
accounting for postretirement benefits other than pensions. The Company
recognized the cumulative transition obligation as of January 1, 1993,
which resulted in a decrease to net income of $9.7 million (17 cents
per share).
(2) Implementation in the first quarter of SFAS No. 109 which changed the
accounting method for deferred income taxes and increased Anadarko's
net income by $87.1 million ($1.52 per share).
(3) SFAS No. 109 also requires that the effect on existing deferred tax
liabilities of any change in income tax rates must be recognized in
income during the period in which the change in tax rates is enacted.
In August 1993, Congress enacted the Omnibus Budget Reconciliation Act
of 1993, which raised the top corporate income tax rate from 34 to 35
percent. As a result, Anadarko recorded a decrease in net income of
$11.2 million (20 cents per share) in the third quarter of 1993.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
millions except per share amounts 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Revenues $434.0 $482.5 $482.0
Costs and expenses 369.5 388.2 377.9
Interest expense 36.4 26.1 29.4
Net income 21.0 41.1 40.0*
Earnings per share $ 0.36 $ 0.70 $ 0.70*
</TABLE>
- ---------------
*Excludes the cumulative effect of changes in accounting principles.
COSTS AND EXPENSES Over the past three years, Anadarko's expense levels have
declined slightly due to constant attention and focus on cost controls, cost
savings plans and application of new technology to field production operations.
In 1995, Anadarko's costs and expenses decreased five percent to $369.5 million
compared to 1994 costs and expenses of $388.2 million. The decrease was a result
of several factors:
(1) Operating expenses decreased $4.4 million (four percent) due primarily
to lower oil and gas operating expenses.
19
<PAGE> 21
(2) Depreciation, depletion and amortization (DD&A) expense decreased $8.1
million (five percent) due to a two percent decrease in gas production
volumes and a 10 percent decrease in crude oil production partly due to
property sales in late 1994. In addition, the DD&A rate decreased four
percent due to additional reserves booked during the year.
(3) Administrative and general expenses were down $1.7 million (three
percent) due to increases in overhead capitalized and amounts charged
to other working interest partners.
(4) Other taxes decreased $4.1 million due primarily to lower natural gas
prices and lower production volumes, which resulted in lower production
and severance taxes.
(5) Provisions for impairments of geothermal and international properties
decreased $0.5 million (16 percent). These impairments in 1995
primarily reflect costs associated with geothermal exploration in the
United States and the review and study of potential exploration
projects in several foreign countries, which the Company has elected
not to pursue.
The Company's 1994 costs and expenses of $388.2 million increased three
percent over 1993 costs and expenses of $377.9 million. There were several
reasons:
(1) Operating expenses increased $5.8 million (six percent) due primarily
to higher oil and gas operating expenses and gas purchased expense;
(2) DD&A expense was up $5.1 million (three percent) due to a nine percent
increase in gas production volumes and a five percent increase in crude
oil and condensate production volumes; the increase was partially
offset by a four percent decline in the DD&A rate due to additional
reserves booked during the year; and,
(3) Administrative and general expenses were up $3.8 million (seven
percent) primarily due to costs associated with salaries and benefits,
as well as related administrative costs.
These factors were partly offset by lower provisions for impairments of
international and geothermal properties in 1994 of $3.1 million compared to $7.0
million in 1993.
COSTS AND EXPENSES
<TABLE>
<CAPTION>
millions 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Operating expenses $105.8 $110.2 $104.3
Administrative and general 59.5 61.1 57.4
DD&A 164.7 172.8 167.7
Other taxes 36.9 41.0 41.5
Provisions for impairments 2.6 3.1 7.0
------ ------ ------
Total $369.5 $388.2 $377.9
------ ------ ------
</TABLE>
INTEREST EXPENSE Anadarko's interest expense has increased by 24 percent over
the past three years due primarily to higher levels of borrowings for producing
property acquisitions and capital expenditures. Interest expense was $36.4
million in 1995, up 39 percent compared to $26.1 million in 1994 and up 24
percent compared to $29.4 million in 1993. Interest expense in 1995 increased
primarily due to higher average borrowings and interest rates in 1995. Interest
expense benefitted in 1994 from an option sold for an interest rate swap
agreement that was not exercised by the purchaser; and, as a result the Company
reduced interest expense in the fourth quarter of 1994 by $2.6 million.
Excluding this reduction, gross interest expense in 1995 was $52.6 million
compared to $44.2 million in 1994 and $38.0 million in 1993. The increase in
gross interest expense in 1994 compared to 1993 is primarily due to higher
average borrowings and interest rates. During the period 1993-95, increased
interest expense has been partly offset by higher capitalized interest due to
increases in excluded costs offshore in the Gulf of Mexico and in Algeria. See
Liquidity and Long-term Debt.
INTEREST EXPENSE
<TABLE>
<CAPTION>
millions 1995 1994 1993
------ ------ -----
<S> <C> <C> <C>
Gross interest expense $ 52.6 $ 44.2 $38.0
Interest rate swap agreement -- (2.6) --
Capitalized interest (16.2) (15.5) (8.6)
------ ------ -----
Net interest expense $ 36.4 $ 26.1 $29.4
------ ------ -----
</TABLE>
20
<PAGE> 22
ANALYSIS OF VOLUMES AND PRICES
NATURAL GAS In 1995, Anadarko's natural gas production was 171.7 billion cubic
feet (Bcf) or 471 million cubic feet per day (MMcf/d) of gas. The 1995 natural
gas production was down two percent compared to 1994 gas production of 175.8 Bcf
or 482 MMcf/d. The 1994 production was up nine percent over natural gas
production of 161.9 Bcf or 444 MMcf/d in 1993. The decline in gas production in
1995 is due primarily to sales of producing properties in late 1994 and 1995 and
natural decline. The increase in gas production from 1993 to 1994 stems
primarily from higher production allowables in the Hugoton Field of Kansas and
the West Panhandle Field of Texas. Anadarko's average U.S. gas price in 1995 was
$1.42 per thousand cubic feet (Mcf), down 17 percent from $1.72 per Mcf in 1994
and down 26 percent from $1.92 per Mcf in 1993. In addition to sales of Anadarko
gas, the Company also marketed 109 Bcf of third-party gas in 1995 compared to 84
Bcf in 1994 and 82 Bcf in 1993. The significant increase in third-party sales is
a key marketing strategy for the Company.
Historically, natural gas sales markets have been highly seasonal because
of the increase in residential heating demand during the winter. As a result,
Anadarko's natural gas prices and production volumes and, therefore, financial
results have traditionally been stronger in the first and fourth quarters.
However, this market trend abruptly changed in 1992 -- prices were lowest in the
winter and highest in late summer; and it changed again in 1993. The gas price
weakness that began in late 1994 continued until mid-December 1995, when a surge
in heating demand caused by extreme winter conditions sent gas prices rocketing
to some of the highest levels seen in nearly 20 years. However, a "decoupling"
of the market caused large variances in prices along the Gulf Coast and the
mid-continent.
This experience shows no one can predict the precise movement of U.S.
natural gas prices. In view of this, Anadarko has developed marketing strategies
to help manage production and sales volumes and cope with the price volatility
that is likely to continue. See Marketing Strategies -- Use of Derivatives.
QUARTERLY NATURAL GAS VOLUMES AND U.S. AVERAGE PRICES
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
FIRST QUARTER
Bcf 41.3 48.2 46.8
MMcf/d 459 536 520
Price per Mcf $1.30 $2.03 $1.73
SECOND QUARTER
Bcf 43.5 43.0 34.8
MMcf/d 479 472 382
Price per Mcf $1.46 $1.74 $2.05
THIRD QUARTER
Bcf 42.3 40.9 35.7
MMcf/d 460 445 388
Price per Mcf $1.27 $1.59 $1.94
FOURTH QUARTER
Bcf 44.5 43.7 44.6
MMcf/d 484 475 485
Price per Mcf $1.64 $1.47 $1.97
</TABLE>
- ---------------
Mcf -- thousand cubic feet
MMcf/d -- million cubic feet per day
Bcf -- billion cubic feet
CRUDE OIL, CONDENSATE AND NATURAL GAS LIQUIDS Anadarko's crude oil and
condensate production was 7.4 million barrels (MMBbls), or 20 MBbls/d in 1995,
down 10 percent from 8.3 MMBbls, or 23 MBbls/d in 1994 and down six percent
compared to 1993 oil and condensate production. The decrease in oil production
is due primarily to property sales in 1994 and 1995 and normal production
declines associated with oil fields.
Anadarko's average U.S. crude oil price for 1995 was $16.52 per barrel, up
10 percent compared to $15.06 per barrel in 1994 and up one percent compared to
1993. Crude oil prices improved even more in late
21
<PAGE> 23
1995 in response to seasonal demand for heating oils; the Company's crude oil
price averaged about $17 per barrel in January 1996. Anadarko believes stronger
prices may continue in 1996; however, oil prices can be expected to drop
sharply -- for a brief period -- if Iraq resumes production.
Generally, the Company's oil production is sold on a monthly basis as it is
produced. Production of oil is usually not affected by seasonal swings in demand
or in market prices.
The Company's NGLs sales volumes in 1995 were 3.6 MMBbls, an increase of
two percent compared to 1994 volumes of 3.5 MMBbls and up eight percent over
1993 NGL sales. The 1995 average price of 31 cents per gallon was 11 percent
higher than the 1994 average price of 28 cents per gallon and about three
percent higher than the 1993 average price. The slight increase in NGLs volumes
was due primarily to processing contracts entered into in 1995 that provided
better economic terms for gas processed in southwest Kansas and offshore Texas,
which was offset partially by the Company's decreased gas production. Total NGLs
sales in 1995 reflect the closing of several plants and the sale of some
producing properties in 1994.
ANNUAL VOLUMES AND U.S. AVERAGE PRICES
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -------
<S> <C> <C> <C>
NATURAL GAS (BCF) 171.7 175.8 161.9
MMcf/d 471 482 444
Price per Mcf $ 1.42 $ 1.72 $1.92
CRUDE OIL AND CONDENSATE (MBBLS) 7,435 8,303 7,910
MBbls/d 20 23 22
Price per barrel $16.52 $15.06 $16.35
NATURAL GAS LIQUIDS (MBBLS) 3,580 3,512 3,320
Price per gallon $ 0.31 $ 0.28 $0.30
</TABLE>
MARKETING STRATEGIES
NATURAL GAS The domestic natural gas market has grown significantly throughout
the last 10 years and continued growth appears likely. One industry group has
forecast a five percent growth rate in 1996. The Company's excellent portfolio
of exploration and development prospects will position Anadarko to continue to
participate in this growth.
Over the past four years, Anadarko's wholly-owned marketing
subsidiary -- Anadarko Trading Company (ATC) -- has evolved into a full-service
marketing company offering supply assurance, competitive pricing and tailored
services to its customers. Most of the Company's gas production is sold through
ATC. A key strategy has been the sale of third-party gas into the Company's
market areas which has increased dramatically over the past three years. ATC's
third-party gas sales have increased 88 percent since 1992.
ATC sells natural gas under a variety of contracts and may also receive a
service fee related to the level of reliability and service required by the
customer. ATC has expanded its marketing capabilities to move larger volumes of
gas into and out of the "daily" gas market to take advantage of any price
volatility. Included in this strategy is expanded use of leased natural gas
storage facilities. In addition, various hedging strategies are sometimes
utilized to better manage price risk associated with natural gas sales. See Use
of Derivatives.
CRUDE OIL AND CONDENSATE Currently, all of the Company's crude oil production
is domestic and the majority is sold on 30-day "evergreen" contracts with prices
based on postings plus a premium. The Company's exploration success in Algeria,
and the ongoing development of five discoveries there since 1993, could
significantly impact Anadarko's production volumes of crude oil and condensate
in 1997 and beyond. As these discoveries are brought on-line, Anadarko will
begin marketing oil worldwide. See "Properties and Activities -- International
- -- Algeria" under Item 1 of this Form 10-K and Use of Derivatives.
GAS GATHERING SYSTEMS AND PROCESSING PLANTS Anadarko's investment in gas
gathering operations allows the Company to better manage its gas production,
improve ultimate recovery of reserves, enhance the value of reserves and expand
marketing opportunities. The Company has invested about $76 million to build or
acquire gas gathering systems and gas processing plants from 1988 to 1995.
Anadarko owned interests in 15 gas gathering systems and seven gas processing
plants in core producing areas at year-end 1995.
22
<PAGE> 24
In October 1994, Anadarko signed agreements to acquire two natural gas
gathering systems in the Kansas Hugoton Field from Panhandle Eastern Pipe Line
Company (PEPL), a subsidiary of PanEnergy Corporation, for a purchase price of
$34 million. The purchase of the intrastate Cimarron River System (CRS) was
completed that month for $2 million and Anadarko took over operation of the
system. Purchase of the second system, a portion of the PEPL gathering assets
(the PEPL System), closed March 1, 1996 for about $32 million. This system will
not be subject to Federal Energy Regulatory Commission (FERC) jurisdiction.
Purchase of these two gathering systems tripled the Company's overall gas
gathering capability to over 480 MMcf/d -- and the systems serve approximately
1,900 wells. Approximately 75 percent of the gas flowing through these systems
is from Anadarko-operated wells. Anadarko plans to invest an additional $15
million in 1996 to lower line pressure and increase deliverability from these
systems.
Anadarko plans to invest an additional $50 million on enhancing the CRS and
PEPL systems over the next several years and improve access to multiple pipeline
market hubs. In 1995, the Company built the Moscow compressor station on a
portion of the PEPL system in Stevens County, Kansas. Anadarko invested $2.2
million to install 3,800 horsepower of compression, lowering the line pressure
from about 50 pounds per square inch (psi) to less than 10 psi, increasing total
production by 2.2 MMcf/d of gas. Anadarko also began construction of the Breech
compressor station in Stevens County, Kansas. Also located on the new HUGS
system, the station will connect 60 Company-operated wells. Line pressure will
be lowered an average 20 psi and should increase production by 4 MMcf/d. On both
new systems listed above, existing horsepower owned by Anadarko was installed,
significantly decreasing the costs associated with these systems. In 1996,
Anadarko plans to install five compressor stations related to the CRS and PEPL
systems, adding about 6,000 horsepower of compression, combined.
Anadarko remains active in the NGLs business, primarily as a result of its
gas gathering and processing operations. The Company generally sells NGLs on a
monthly basis as they are produced. However, some NGLs are held in inventory for
sale at a later date. Anadarko generally markets NGLs under short-term
contracts. Anadarko had 66,600 barrels of NGLs in inventory at the end of 1995
compared to 89,000 barrels at the end of 1994.
USE OF DERIVATIVES Anadarko uses derivative financial instruments to limit
exposure to changes in the market price of natural gas and crude oil for the
Company and to provide methods to fix the price for natural gas independently of
the physical purchase or sale. Derivative instruments also provide methods to
meet customer pricing requirements while achieving a price structure consistent
with the Company's overall pricing strategy. While financial instruments are
intended to reduce the Company's exposure to declines in the market price of
natural gas and crude oil, the financial instruments may also limit Anadarko's
gain from increases in the market price of natural gas and crude oil. As a
result, gains and losses on financial instruments are generally offset by
similar changes in the realized price of natural gas and crude oil. Gains and
losses are recognized in revenues for the periods to which the financial
instruments relate. Anadarko's financial instruments currently are comprised of
futures, swaps and options. See Note 6 of the Notes to Consolidated Financial
Statements under Item 8 of this Form 10-K.
OPERATING RESULTS
In 1995, Anadarko elected to defer drilling opportunities on some gas
projects offshore. Capital investments for exploration and development
activities decreased to $195 million compared to $325 million in 1994 and $175
million in 1993. The largest area of decrease in 1995 (and the largest area of
increase in 1994) was acquisition of lease acreage. Spending for exploration
amounted to 30 percent of the Company's total capital expenditures budget in
1995. The 1994 spending included $72 million for exploratory leases offshore in
the Gulf of Mexico.
DRILLING ACTIVITY During 1995, Anadarko participated in a total of 258 wells,
including 114 oil wells, 98 gas wells and 46 dry holes. This compares to 281
wells (147 oil wells, 95 gas wells and 39 dry holes) in 1994 and 219 wells (131
oil wells, 55 gas wells and 33 dry holes) in 1993.
During 1995, the Company made several significant well completions in its
exploration and development drilling program which are discussed in the
narrative descriptions under "International Operations" and
23
<PAGE> 25
"Domestic Operations" in the Annual Report to Stockholders, incorporated herein
by reference, and "Properties and Activities" under Item 1 of this Form 10-K.
DRILLING PROGRAM ACTIVITY
<TABLE>
<CAPTION>
GAS OIL DRY TOTAL
----- ----- ----- ------
<S> <C> <C> <C> <C>
1995 EXPLORATORY
Gross 3 9 5 17
Net 1.7 3.6 3.4 8.7
1995 DEVELOPMENT
Gross 95 105 41 241
Net 72.6 87.3 40.1 200.0
1994 EXPLORATORY
Gross 9 6 17 32
Net 7.1 2.8 10.1 20.0
1994 DEVELOPMENT
Gross 86 141 22 249
Net 70.8 94.2 17.3 182.3
</TABLE>
- ---------------
Gross: total wells in which there was participation.
Net: working interest ownership
RESERVE REPLACEMENT Drilling activity is not a true measure of success for an
exploration and production company. Anadarko focuses on growth and profitability
as the best measures of success. Reserve replacement is the key to growth for an
exploration and production company. Anadarko also believes future profitability
depends on the cost of finding oil and gas reserves. The Company's performance
in both areas is excellent. For the 14th consecutive year, Anadarko more than
replaced annual production volumes with proved reserves of natural gas, crude
oil, condensate and NGLs, stated on an energy equivalent barrel (EEB) basis.
During 1995, Anadarko's worldwide reserve replacement was 226 percent of
total production. Production in 1995 was 39.6 million energy equivalent barrels
(MMEEBs). In 1995, the Company replaced 104 percent of its production volumes
with U.S. reserves. Based on the results of successful exploration and
development drilling operations during the year, Anadarko's net proved reserves
in Algeria were increased from 44 MMBbls at the end of 1994 to 92.5 MMBbls at
the end of 1995, an increase of 110 percent. By comparison, the Company's
worldwide reserve replacement was 308 percent of total production of 41.0 MMEEBs
in 1994 and 162 percent of total production of 37.5 MMEEBs in 1993.
During 1995, the Company replaced 212 percent of total production through
exploration and development drilling and improved recovery operations. By
comparison, these drilling categories replaced 253 percent of production in 1994
and 151 percent of production in 1993. In 1995, acquisitions, including
purchases and trades, added 9.8 MMEEBs compared to 14.6 MMEEBs in 1994 and 5.7
MMEEBs in 1993. In addition, Anadarko sold 11.9 MMEEBs of reserves in 1995. See
Acquisitions and Divestitures.
Anadarko's natural gas reserve replacement in 1995 was 58 percent of total
production compared with 122 percent of total production in 1994 and 192 percent
in 1993. The Company replaced 664 percent of its crude oil, condensate and NGLs
production in 1995 compared to 773 percent in 1994 and 83 percent in 1993.
Anadarko continues to increase its reserves of crude oil and natural gas
while the nation's energy reserves are steadily declining. The Company's U.S.
reserve replacement for the five-year period 1991-95 was 175 percent of
production. By comparison, the most recent published U.S. industry average
(1990-94) was 83 percent. (Source: Department of Energy.) Anadarko's U.S.
reserve replacement performance for the same period 1990-94 was 179 percent of
production. Industry data for 1995 are not yet available.
COST OF FINDING For 1995, Anadarko's worldwide finding cost for proved reserves
was $2.74 per EEB compared to $2.76 per EEB in 1994 and to $4.07 per EEB in
1993. The Company's worldwide finding costs were lower in 1995 and 1994 due to
the success of the Algerian exploration program. Anadarko's U.S. finding cost
for 1995 was $4.26 per EEB compared to $3.57 per EEB in 1994 and $3.55 per EEB
in 1993.
24
<PAGE> 26
Cost of finding results in any one year can be misleading due to the long
lead times associated with exploration and development. A better measure of cost
of finding performance is over a five-year period. Anadarko has consistently
outperformed the industry in average finding costs. For the period 1991-95,
Anadarko's U.S. cost of finding was $3.74 per EEB. Anadarko's worldwide finding
cost for the same five-year period was $3.39 per EEB. Industry data for 1995 are
not yet available. For comparison purposes, the most recent published five-year
average (1990-94) for the industry shows U.S. average cost of finding was $4.97
per EEB and worldwide cost of finding was $5.13 per EEB. (Source: Arthur
Andersen & Co, SC) For the same period, Anadarko's U.S. finding cost was $3.80
per EEB and worldwide finding cost was $3.78 per EEB.
PROVED RESERVES At the end of 1995, Anadarko's proved reserves were 526.3
MMEEBs compared to 476.4 MMEEBs at year-end 1994 and 391.1 MMEEBs at year-end
1993. Reserves increased by 10 percent in 1995 compared to 1994, due to
exploration and development drilling, improved recovery and acquisitions.
Anadarko's proved reserves have grown by 43 percent over the past three years,
primarily as a result of successful exploration projects in the Gulf of Mexico
and Algeria, as well as successful exploitation and development drilling
programs in major domestic fields onshore and offshore.
The Company's proved natural gas reserves at year-end 1995 were 1.84
trillion cubic feet (Tcf) compared to 1.91 Tcf at year-end 1994 and 1.88 Tcf at
year-end 1993. Anadarko's crude oil, condensate and NGLs reserves at year-end
1995 were 219.2 MMBbls. This compares to reserves of 157.4 MMBbls at year-end
1994 and 78.5 MMBbls at year-end 1993. Crude oil, condensate and NGLs reserves
now comprise 42 percent of the Company's proved reserves compared to about 34
percent at year-end 1994 and about 20 percent at year-end 1993.
During 1995, Anadarko added proved reserves of 48.5 MMEEBs in Algeria,
based on preliminary development studies and the contractual rights granted
under the SONATRACH Production Sharing Agreement. The political unrest in
Algeria has been the subject of numerous media reports. Although the Company was
encouraged by democratic elections held in 1995, the Company is closely
monitoring the situation and has taken reasonable and prudent steps to ensure
the safety of employees working in the remote regions of the Sahara Desert.
Anadarko is presently unable to predict with certainty any effect the current
situation may have on activity planned for 1996 and beyond. However, the
situation has not had any material effect on the Company's operations. See
"Properties and Activities -- International -- Algeria" under Item 1 of this
Form 10-K and Additional Factors Affecting Business.
The Company emphasizes that the volumes of reserves are estimates which, by
their nature, are subject to revision. The estimates are made using all
available geologic and reservoir data as well as production performance data.
These estimates are reviewed annually and revised, either upward or downward, as
warranted by additional performance data.
At December 31, 1995, the present value (discounted at 10 percent) of
future net revenues from Anadarko's proved reserves, before income taxes, was
$2.56 billion (stated in accordance with the regulations of the Securities and
Exchange Commission and Financial Accounting Standards Board). The 1995
estimated present value of future net revenues, before income taxes, increased
27 percent compared to 1994 primarily due to the additions of proved reserves
related to successful drilling in Algeria and offshore in the Gulf of Mexico and
due to an increase in oil and gas prices at year-end 1995. See Supplemental
Information on Oil and Gas Exploration and Production Activities in the
Consolidated Financial Statements under Item 8 of this Form 10-K.
The present value of future net revenues does not purport to be an estimate
of the fair market value of Anadarko's proved reserves. An estimate of fair
value would also take into account, among other things, anticipated changes in
future prices and costs, the expected recovery of reserves in excess of proved
reserves and a discount factor more representative of the time value of money
and the risks inherent in producing oil and gas.
ACQUISITIONS AND DIVESTITURES
In 1995, the Company added through acquisitions 9.8 MMEEBs of reserves at a
cost of $26 million, or $2.66 per EEB. Anadarko plans to invest about $11
million over the next few years to further develop these reserves. The largest
acquisition, described below, was a package of properties in west Texas
purchased from
25
<PAGE> 27
Shell Western E&P (SWEPI). The Company also purchased for $9.5 million a water
supply system in west Texas which should reduce operating costs and enable
expansions of several important waterflood projects.
Total 1995 sales proceeds from divestitures were $66.6 million which
included assets in north Texas and the Permian Basin of southeast New Mexico and
west Texas. Reserves sold equaled 11.9 MMEEBs, resulting in unit proceeds of
$5.60 per EEB. The largest sale in 1995 was the Company's interest in 25
"non-strategic" fields to other operators for $56.8 million. The combined daily
net production of these properties is 1,800 BOPD and 12 MMcf/d of gas.
The Company's largest acquisition of 1995 occurred in the fourth quarter,
when Anadarko added to its Permian Basin holdings in the TXL Field area by
purchasing TXL properties in Ector County, Texas for about $24 million in cash.
The purchase was effective July 1, 1995. The combined net daily production rate
of the properties projected for 1996 is 900 BOPD and 2.9 MMcf/d of gas. The
package includes a 70 percent interest in the SWEPI-operated TXL North Unit in
which Anadarko already held a 10 percent interest. The Company is now the
operator of the unit. The acquisition also increased Anadarko's working interest
in the adjacent TXL South Unit by seven percent to a total of 65 percent.
Anadarko initially acquired a 23 percent interest in the TXL South Unit from
ARCO in 1992. Through 1994 trades and 1995 acquisitions, the Company has
increased its working interests in this unit to the current 65 percent and has
assumed operatorship. Anadarko plans waterflood expansion programs for both of
these units over the next several years. The acquisition of these assets
strengthens Anadarko's waterflood operations in this core area, which includes
the adjacent Goldsmith Cummins Deep Unit acquired from ARCO in 1992.
The Company's results in acquisitions and divestitures for 1995 are a
continuation of an asset management program begun several years ago. The outcome
of this program has been significant. Over the past three years, Anadarko has
acquired through purchases and trades 30.1 MMEEBs of proved reserves at a cash
cost of $67 million, or $2.23 per EEB. Future development costs associated with
these reserves are estimated at $27 million. During the same time period, the
Company has sold properties, either as a strategic exit or by asset
rationalization in existing core areas, with proceeds totaling $177 million.
Reserves associated with these sales and trades are 29.0 MMEEBs, resulting in
unit proceeds of $6.09 per EEB. In addition to the 1995 sale of certain Permian
Basin and north Texas properties discussed above, the program includes the 1994
sale of assets in the Arkoma Basin, the Rocky Mountains and all of the Company's
Canadian holdings. Reserves associated with these 1994 sales and trades were
17.1 MMEEBs, with proceeds of $109 million.
Overall, the number of U.S. producing properties in which Anadarko has an
interest has been reduced by 35 percent, allowing both people resources and
financial proceeds to focus on the Company's core areas of operation, including
reinvestment in quality acquisitions with strong growth potential. For example,
in June 1993, Anadarko acquired deep producing oil and gas properties and
additional lease acreage in the Hugoton area of southwest Kansas from Mesa
Operating Limited Partnership for approximately $20 million. In 1995, Anadarko
drilled or re-completed 18 wells on these properties as a continuation of an
active exploitation program begun immediately after acquisition. As a result,
production in these properties has increased 300 percent since the time of
purchase. The outcome of Anadarko's focused program is that nonstrategic assets
have been sold at excellent prices and proceeds have been reinvested in lower
cost of finding opportunities in core areas, including acquisitions where
additional growth potential can be achieved through continued investment in
development activities.
26
<PAGE> 28
PRODUCING PROPERTIES AND LEASES
The Company owns 2,253 net producing oil wells and 1,875 net producing gas
wells worldwide. The following schedule shows the number of developed and
undeveloped acres in which Anadarko held interests at December 31, 1995. The
Company's ownership position declined in 1995 due to sales of some producing
properties in 1995.
ACREAGE
<TABLE>
<CAPTION>
DEVELOPED UNDEVELOPED TOTAL
------------- --------------- ---------------
thousands GROSS NET GROSS NET GROSS NET
----- --- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
United States
Onshore 1,830 842 1,975 578 3,805 1,420
Offshore 160 47 350 190 510 237
----- --- ----- ----- ----- -----
Total 1,990 889 2,325 768 4,315 1,657
----- --- ----- ----- ----- -----
United States -- Geothermal -- -- 168 167 168 167
Algeria -- -- 5,340 2,133 5,340 2,133
Eritrea -- -- 6,700 6,700 6,700 6,700
Indonesia -- -- 2,030 677 2,030 677
</TABLE>
REGULATORY AND LEGISLATIVE DEVELOPMENTS
FERC APPROVAL OF PANHANDLE GATHERING SYSTEM SPINDOWN In December 1995, the FERC
issued orders approving Anadarko Gathering Company's acquisition of certain PEPL
gathering assets and declaring that the assets will not be subject to FERC
jurisdiction. Anadarko took over operations of the PEPL assets in March 1996.
THE PRIVATE SECURITIES LITIGATION AND REFORM ACT OF 1995 In December 1995,
Congress overrode a presidential veto and changed some of the federal laws
relating to private securities litigation. The legislation creates a statutory
"safe harbor" from securities fraud liability for "forward-looking" corporate
disclosures that are accompanied by sufficient cautionary language. This change
results from past arguments that the potential risk of liability under Rule
10b-5 under the Securities Exchange Act of 1934 inhibits disclosure by
management of projected future performance, to the detriment of investors. See
Forward Looking Statements under Additional Factors Affecting Business.
LIFTING BAN ON NORTH SLOPE OIL PRODUCTION IN 1995 In November 1995, legislation
was signed into law allowing North Slope oil to be exported, lifting a 22-year
ban and allowing oil to be traded on the world markets, pending an environmental
review and a determination from the administration that exports would be in the
national interest. The legislation also waives for five years royalty payments
on deep water oil and gas leases in the Gulf of Mexico.
ENVIRONMENTAL The Company's oil and gas operations and properties are subject
to numerous federal, state and local laws and regulations relating to
environmental protection. These laws and regulations govern, among other things,
the amounts and types of substances and materials that may be released into the
environment, the issuance of permits in connection with drilling and production
activities, the discharge and disposition of waste materials, offshore oil and
gas operations, the reclamation and abandonment of wells and facility sites and
the remediation of contaminated sites. In addition, these laws and regulations
may impose substantial liabilities for the Company's failure to comply with them
or for any contamination resulting from the Company's operations.
Anadarko takes the issue of environmental stewardship very seriously and
works diligently to ensure that all areas of the Company's operations are in
compliance with applicable environmental rules and regulations.
Compliance with such laws and regulations has not had a material adverse
effect on the Company's operations or financial condition in the past. However,
because environmental laws and regulations are becoming increasingly more
stringent, there can be no assurances that such laws and regulations or any
27
<PAGE> 29
environmental law or regulation enacted in the future will not have a material
adverse effect on the Company's operations or financial condition.
For a description of certain environmental proceedings in which the Company
is involved, see Note 16 of the Notes to Consolidated Financial Statements under
Item 8 of this Form 10-K.
OTHER Regulatory agencies in certain states have authority to issue permits for
the drilling of wells, regulate the spacing of wells, prevent the waste of oil
and gas resources through proration and regulate environmental matters.
Operations conducted by the Company on federal oil and gas leases must
comply with numerous regulatory restrictions, including various
nondiscrimination statutes. Additionally, certain operations must be conducted
pursuant to appropriate permits issued by the Bureau of Land Management and the
Minerals Management Service of the Department of Interior and, in regard to
certain federal leases, with prior approval of drill site locations by the
Environmental Protection Agency.
ADDITIONAL FACTORS AFFECTING BUSINESS
COMMODITY PRICING AND DEMAND Crude oil prices continue to be affected by
political developments worldwide, pricing decisions of the Organization of
Petroleum Exporting Countries (OPEC) and the volatile trading patterns in the
commodity futures markets. Natural gas prices also continue to be highly
volatile. In periods of sharply lower commodity prices, the Company will often
curtail capital spending projects and delay or defer drilling wells in certain
areas because of lower cash flows. Changes in crude oil and natural gas prices
can impact the Company's determination of proved reserves and the Company's
calculation of the standardized measure of discounted future net cash flows
relating to oil and gas reserves. In addition, demand in the United States and
worldwide may affect the Company's level of production.
EXPLORATION AND OPERATING RISKS The Company's business is subject to all of the
operating risks normally associated with the exploration for and production of
oil and gas, including blowouts, cratering and fire, each of which could result
in damage to or destruction of oil and gas wells or formations or production
facilities and other property and injury to persons. As protection against
financial loss resulting from these operating hazards, the Company maintains
insurance coverage, including certain physical damage, employer's liability,
comprehensive general liability and workmen's compensation insurance. Although
the Company is not fully insured against all risks in its business, the Company
believes that the coverage it maintains is customary for companies engaged in
similar operations. The occurrence of a significant event against which the
Company is not fully insured could have a material adverse effect on the
Company's financial position.
DEVELOPMENT RISKS The Company is increasingly involved in large development
projects in the Gulf of Mexico and internationally. Key factors that may affect
the timing and outcome of such projects include: project approvals by
joint-venture partners; timely issuance of permits and licenses by host country
governmental agencies; manufacturing and delivery schedules of critical
equipment items; and commercial arrangements for pipelines and related equipment
to transport and market hydrocarbons. In all large development projects, these
uncertainties are ultimately resolved, but delays and differences between
estimated timing and actual timing of critical events is commonplace and may,
therefore, affect the forward-looking statements related to large development
projects.
POLITICAL RISKS The domestic and international operations of the Company have
been, and at times in the future may be, affected by political developments and
by foreign federal, state and local laws and regulations such as restrictions on
production, changes in taxes, royalties and other amounts payable to governments
or governmental agencies, price or gathering rate controls, expropriation by
foreign governments and environmental protection regulations.
COMPETITION The oil and gas business is highly competitive in the search for
and acquisition of reserves, as well as, in the gathering and marketing of oil
and gas production. The Company's competitors include the major oil companies,
independent oil and gas concerns, individual producers, gas marketers and major
pipeline companies, as well as participants in other industries supplying energy
and fuel to industrial, commercial and individual consumers. Competition for
drilling rigs is keen in certain areas of the Gulf of Mexico. During 1995,
28
<PAGE> 30
the Company began to experience slight increases in drilling rig rental rates
due to the tight rig market in the Gulf of Mexico.
FORWARD LOOKING STATEMENTS In its disclosure of financial and operating
results, the Company has included a number of 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. These forward looking statements are based on
the best data available at the time this report was released for printing;
however, these projections could be substantially affected by the factors shown
above: commodity pricing for oil and gas, exploration and operating risks,
development risks, political risks and competition.
CAPITAL EXPENDITURES, LIQUIDITY AND LONG-TERM DEBT
CAPITAL EXPENDITURES Anadarko's total capital spending in 1995 dropped 22
percent to $331 million compared to 1994 spending of $423 million. The capital
expenditures budget was lowered in 1995 based on the anticipation of lower gas
prices for the year. Another reason for the reduced spending levels was that
spending activity for sub-salt drilling was deferred to late in the year and the
purchase of the PEPL gathering systems assets did not close until March 1996. In
addition, the 1994 spending included $72 million to acquire 26 offshore lease
blocks in the Gulf of Mexico at the Minerals Management Service Offshore Lease
Sale No. 147 in March 1994. The Company spent $265 million in 1993. The largest
categories of capital spending in 1995, 1994 and 1993 were for exploration and
development activities in the U.S. and overseas. The Company funded its capital
investment program in 1995 and 1994 primarily through cash flow, plus proceeds
from property sales and increases in long-term debt.
CAPITAL EXPENDITURES
<TABLE>
<CAPTION>
millions 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Exploration $97.9 $196.0 $97.3
Development 96.8 128.8 77.7
Acquisitions of Producing Properties 26.0 18.1 27.8
Gathering and Other 52.4 25.1 18.5
Interest and Overhead 58.1 54.7 43.2
------ ------ ------
Total $331.2 $422.7 $264.5
------ ------ ------
</TABLE>
Capital spending for 1996 has been set at $485 million, including $137
million for exploration, $226 million for development, $32 million for gas
gathering acquisitions, $20 million for gas gathering and other operations, $9
million for miscellaneous and $61 million of capitalized interest and overhead.
This capital expenditures budget represents an increase of $154 million over
1995. The Company will be spending 42 percent of its development budget in
Algeria, moving towards first production in 1997. Significant capital
investments will also be used to develop the Mahogany Field in the Gulf of
Mexico and other exploratory drilling, delineation in Indonesia, Alaska
exploration, studies in Eritrea and Jordan, and improvements to gathering
systems onshore U.S.
The Company's capital investments have generally been tied to cash flows
from gas and oil production volumes. The spending has been accompanied by
significant performance in reserve replacement at competitive finding costs and
growth in the Company's proved reserves.
Historically, the Company has based capital spending on anticipated cash
flows including proceeds from divestitures, but certain portions of the capital
spending budget -- such as acquisitions -- have been financed from time to time.
In addition, the Company's budget is adjusted periodically to reflect changes in
market prices for oil and natural gas. The Company believes cash flows,
including proceeds from divestitures, and existing credit facilities will be
sufficient to meet capital and operating requirements during 1996.
LIQUIDITY AND LONG-TERM DEBT Over the past three years, Anadarko has taken
steps to strengthen its balance sheet and control interest costs. The Company
has made significant efforts to secure fixed-rate debt with longer term
maturities at competitive rates when available in the financial markets.
29
<PAGE> 31
At year-end 1995, Anadarko's total debt was $674 million, which included
$500 million of fixed interest rate debt and $174 million of floating interest
rate debt. This compares to 1994 total debt of $629.3 million, which included
$400 million of fixed interest rate debt and $229.3 million of floating interest
rate debt. At year-end 1993, total debt was $542.5 million, which included $400
million of fixed and $142.5 million of floating interest rate debt. The increase
of $44.7 million or seven percent in 1995 over 1994 long-term debt is primarily
related to lower cash flow. The increase of $86.8 million on long-term debt in
1994 compared to 1993 primarily related to Anadarko's purchase of offshore
leases in the Gulf of Mexico in 1994.
In March 1995, Anadarko issued $100 million principal amount of 7 1/4%
Debentures due 2025. Each Debenture holder has the one-time right to have the
Company purchase on March 15, 2000, all or a portion of, the Debenture at a
purchase price equal to par plus accrued and unpaid interest. Net proceeds from
the offering were used to fix floating interest rate debt.
In May 1994, Anadarko entered into a $250 million Revolving Credit
Agreement and a $150 million 364-Day Credit Agreement with a group of commercial
banks. These agreements replace the Revolving Credit and Term Loan Agreement the
Company entered into in February 1992. As of December 31, 1995 and 1994, there
were no outstanding borrowings under these agreements.
In October 1993, Anadarko filed a shelf registration with the Securities
and Exchange Commission that permits the issuance of up to $300 million in
senior and subordinated debt securities and equity securities. Net proceeds,
terms and pricings of offerings of securities issued under the shelf
registration are determined at the time of the offering. Anadarko has used
similar shelf registrations since 1989 to provide added flexibility in financing
strategies. As of December 1995, $100 million principal amount of securities had
been issued under the shelf registration.
In May 1995, the Company issued one million shares of common stock to the
Anadarko Petroleum Corporation Executives and Directors Benefits Trust (Trust)
to secure present and future unfunded benefit obligations of the Company. The
shares issued to the Trust are not considered outstanding for quorum or voting
calculations, but the Trust will receive dividends. The shares are included in
the calculation of earnings per share under the treasury stock method and have
no dilutive effect.
Anadarko's net cash from operating activities in 1995 was $248 million
compared to $240 million in 1994 and $274 million in 1993.
CHANGES IN ACCOUNTING PRINCIPLES
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS Statement of Financial Accounting
Standards (SFAS) No. 106 focuses primarily on health care benefits. SFAS No. 106
changed the accounting treatment for these benefits from a "pay-as-you-go" basis
to accrual of the expected costs of providing these benefits during the years
the employee renders service. The Company chose to recognize the cumulative
transition obligation as of January 1, 1993, as the effect of a change in
accounting principle in the first quarter of 1993. The Company's cumulative
transition obligation was approximately $19.8 million, resulting in a decrease
to 1993 net income of about $9.7 million (17 cents per share) which is net of
$5.4 million deferred income tax benefit.
DEFERRED INCOME TAXES SFAS No. 109 requires a change from the deferred method
of accounting for income taxes to the asset and liability method. SFAS No. 109
was adopted by the Company in the first quarter of 1993 and increased 1993 net
income by $87.1 million ($1.52 per share). Under this method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates applicable to those
years in which the temporary differences between the financial statement
carrying amounts and tax bases are expected to be recovered or settled. The
effect of a change in tax rates on deferred tax assets and liabilities is
recognized in income in the period when the change was enacted.
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 earnings of $11.2
million (20 cents per share) in the third quarter of 1993.
IMPAIRMENT OF LONG-LIVED ASSETS SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Assets to be Disposed Of", requires review of an asset for
impairment whenever events or changes in
30
<PAGE> 32
circumstances indicate that the carrying amount of the asset may not be
recoverable. The impairment provisions of SFAS No. 121 with respect to
long-lived assets will not have any impact on Anadarko since the full-cost
method of accounting for oil and gas properties is used. See Note 1 of the Notes
to Consolidated Financial Statements under Item 8 of this Form 10-K.
STOCK-BASED COMPENSATION SFAS No. 123, "Accounting for Stock-Based
Compensation" defines a fair value based method of accounting for an employee
stock option or similar equity instrument. SFAS No. 123 allows an entity to
continue to measure compensation costs for these plans using the current method
of accounting. Anadarko has elected to continue to use the current method of
accounting for employee stock compensation plans and, beginning in 1996, will
disclose in the Notes to the Consolidated Financial Statements the fair value as
defined in SFAS No. 123.
DIVIDENDS
In 1995, Anadarko paid $17.7 million in dividends to its common
stockholders (7.5 cents per share per quarter). The dividend amount was $17.6
million (7.5 cents per share per quarter) in 1994 and $17.2 million (7.5 cents
per share per quarter) in 1993. Anadarko has paid a dividend continuously since
becoming an independent company in 1986.
The Revolving Credit Agreement and the 364-Day Credit Agreement require a
minimum balance of $650 million to be maintained in retained earnings. As a
result, the amount of retained earnings available for dividends as of December
31, 1995 was $259.7 million. The amount of future dividends will depend on
earnings, financial condition, capital requirements and other factors, and will
be determined by the Board of Directors on a quarterly basis.
31
<PAGE> 33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ANADARKO PETROLEUM CORPORATION
INDEX
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Management 33
Independent Auditors' Report 34
Statement of Income, Three Years Ended December 31, 1995 35
Balance Sheet, December 31, 1995 and 1994 36
Statement of Stockholders' Equity, Three Years Ended December 31, 1995 37
Statement of Cash Flows, Three Years Ended December 31, 1995 38
Notes to Consolidated Financial Statements 39
Supplemental Quarterly Information 56
Supplemental Information on Oil and Gas Exploration
and Production Activities 57
</TABLE>
32
<PAGE> 34
ANADARKO PETROLEUM CORPORATION
REPORT OF MANAGEMENT
The management of Anadarko Petroleum Corporation is responsible for the
preparation and integrity of all information contained in the accompanying
consolidated financial statements. The financial statements have been prepared
in conformity with generally accepted accounting principles appropriate in the
circumstances. In preparing the financial statements, management makes informed
judgements and estimates.
Management maintains and relies on the Company's system of internal
accounting controls. Although no system can ensure elimination of all errors and
irregularities, this system is designed to provide reasonable assurance that
assets are safeguarded, transactions are executed in accordance with
management's authorization and accounting records are reliable as a basis for
the preparation of financial statements. This system includes the selection and
training of qualified personnel, an organizational structure providing
appropriate delegation of authority and division of responsibility, the
establishment of accounting and business policies for the Company and the
conduct of internal audits.
The Board of Directors pursues its responsibility for the consolidated
financial information through its Audit Committee, which is composed solely of
directors who are not officers or employees of Anadarko. The Audit Committee
recommends to the Board of Directors the selection of independent auditors and
reviews their fee arrangements. The Audit Committee meets periodically with
management, the internal auditors and the independent auditors to review that
each is carrying out its responsibilities. The internal and independent auditors
have full and free access to the Audit Committee to discuss auditing and
financial reporting matters.
We believe that Anadarko's policies and procedures, including its system of
internal accounting controls, provide reasonable assurance that the financial
statements are prepared in accordance with the applicable securities laws.
[ROBERT J. ALLISON, JR.]
Robert J. Allison, Jr.
Chairman, President and
Chief Executive Officer
[MICHAEL E. ROSE]
Michael E. Rose
Senior Vice President and
Chief Financial Officer
33
<PAGE> 35
ANADARKO PETROLEUM CORPORATION
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Anadarko Petroleum Corporation:
We have audited the accompanying consolidated balance sheets of Anadarko
Petroleum Corporation and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three-year period ended December 31, 1995, as
contained in the 1995 Form 10-K Annual Report. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Anadarko
Petroleum Corporation and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in notes 13 and 15 to the consolidated financial statements,
the Company adopted the provisions of the Financial Accounting Standards Board
Statements of Financial Accounting Standards No. 109, Accounting For Income
Taxes, and No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, respectively, in 1993.
[KPMG PEAT MARWICK LLP]
Houston, Texas
February 1, 1996
34
<PAGE> 36
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1995 1994 1993
- ----------------------- -------- -------- --------
thousands
<S> <C> <C> <C>
REVENUES
Gas sales $259,849 $313,470 $310,576
Oil and condensate sales 125,980 125,640 127,042
Natural gas liquids and other 48,185 43,366 44,382
-------- -------- --------
Total 434,014 482,476 482,000
-------- -------- --------
COSTS AND EXPENSES
Operating expenses Note 11 105,829 110,202 104,372
Administrative and general 59,477 61,138 57,363
Depreciation, depletion and amortization 164,742 172,825 167,699
Other taxes Note 12 36,892 40,973 41,497
Provisions for impairments of international and geothermal
properties Note 5 2,600 3,100 7,000
-------- -------- --------
Total 369,540 388,238 377,931
-------- -------- --------
Operating Income 64,474 94,238 104,069
OTHER INCOME AND EXPENSES
Other income 1,150 2,123 2,755
Interest expense Notes 5 and 6 (36,358) (26,128) (29,423)
Disposition of foreign subsidiary Note 2 -- (5,567) --
-------- -------- --------
Income before Income Taxes and Cumulative Effect of
Changes in Accounting Principles 29,266 64,666 77,401
INCOME TAXES Note 13
Income taxes 8,231 23,567 26,147
Effect of change in income tax rate -- -- 11,249
-------- -------- --------
Total 8,231 23,567 37,396
-------- -------- --------
Net Income before Cumulative Effect of Changes in
Accounting Principles 21,035 41,099 40,005
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
Notes 13 and 15 -- -- 77,403
-------- -------- --------
NET INCOME $ 21,035 $ 41,099 $117,408
-------- -------- --------
PER COMMON SHARE
Net income before cumulative effect of changes in
accounting principles $ 0.36 $ 0.70 $ 0.70
Cumulative effect of changes in accounting principles -- -- 1.35
Net income 0.36 0.70 2.05
Dividends Note 7 $ 0.30 $ 0.30 $ 0.30
-------- -------- --------
AVERAGE NUMBER OF SHARES OUTSTANDING Note 7 58,935 58,776 57,220
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE> 37
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31 1995 1994
- ----------- ---------- ----------
thousands
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents Note 3 $ 17,090 $ 6,530
Accounts receivable 127,943 115,181
Inventories Note 4 14,859 13,420
Prepaid expenses 3,306 3,496
---------- ----------
Total 163,198 138,627
---------- ----------
PROPERTIES AND EQUIPMENT
Original cost 3,717,672 3,446,252
Less accumulated depreciation, depletion and amortization 1,628,922 1,460,196
---------- ----------
Net properties and equipment -- based on the full cost method of
accounting for oil and gas properties Note 5 2,088,750 1,986,056
---------- ----------
DEFERRED CHARGES 15,099 17,418
---------- ----------
$2,267,047 $2,142,101
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
Trade and other $ 153,502 $ 95,829
Bank 12,849 14,287
Accrued expenses
Interest 10,729 7,676
Taxes and other 13,393 10,359
---------- ----------
Total 190,473 128,151
---------- ----------
LONG-TERM DEBT Note 6 674,008 629,281
---------- ----------
DEFERRED CREDITS
Deferred income taxes Note 13 449,798 438,684
Other 43,074 46,386
---------- ----------
Total 492,872 485,070
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, par value $0.10
(200,000,000 shares authorized, 60,016,045 and 58,857,290 shares
issued as of December 31, 1995 and 1994, respectively) 6,047 5,931
Preferred stock, par value $1.00
(2,000,000 shares authorized, no shares issued as of December 31,
1995 and 1994) -- --
Paid-in capital 304,125 243,976
Retained earnings (as of December 31, 1995,
$259,694,000 was not restricted as to the payment of dividends) 656,455 653,112
Deferred compensation (2,808) (3,420)
Executives and directors benefit trust, at market value (1,000,000
shares as of December 31, 1995) (54,125) --
---------- ----------
Total 909,694 899,599
---------- ----------
COMMITMENTS AND CONTINGENCIES Notes 10, 15 and 16 -- --
---------- ----------
$2,267,047 $2,142,101
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
36
<PAGE> 38
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1995 1994 1993
- ----------------------- -------- -------- --------
thousands
<S> <C> <C> <C>
COMMON STOCK
Balance at beginning of year $ 5,931 $ 5,912 $ 5,580
Exercise of stock options 6 9 21
Issuance of restricted stock 3 3 11
Issued for employee savings plan 7 7 8
Issued for executives and directors benefit trust 100 -- --
Conversion of 6 1/4% Debentures -- -- 292
-------- -------- --------
Balance at end of year 6,047 5,931 5,912
-------- -------- --------
PAID-IN CAPITAL
Balance at beginning of year 243,976 236,001 125,217
Exercise of stock options, net of income tax effects 1,860 3,115 4,248
Issuance of restricted stock 1,103 1,812 4,442
Issuance of stock for employee savings plan 3,161 3,048 3,309
Issuance of stock and revaluation to market for executives and
directors benefit trust 54,025 -- --
Conversion of 6 1/4% Debentures, net -- -- 98,785
-------- -------- --------
Balance at end of year 304,125 243,976 236,001
-------- -------- --------
RETAINED EARNINGS
Balance at beginning of year 653,112 625,308 527,103
Net income 21,035 41,099 117,408
Foreign translation losses -- (1,686) (1,701)
Cumulative translation losses transferred to the income
statement upon disposition of foreign subsidiary -- 6,065 --
-------- -------- --------
674,147 670,786 642,810
Dividends paid (17,692) (17,635) (17,217)
Issuance of treasury stock -- (39) (285)
-------- -------- --------
Balance at end of year 656,455 653,112 625,308
-------- -------- --------
DEFERRED COMPENSATION
Balance at beginning of year (3,420) (3,055) --
Issuance of restricted stock (1,106) (1,668) (4,522)
Amortization of restricted stock 1,718 1,303 1,467
-------- -------- --------
Balance at end of year (2,808) (3,420) (3,055)
-------- -------- --------
EXECUTIVES AND DIRECTORS BENEFIT TRUST
Balance at beginning of year -- -- --
Issuance of stock (42,375) -- --
Revaluation to market (11,750) -- --
-------- -------- --------
Balance at end of year (54,125) -- --
-------- -------- --------
TREASURY STOCK
Balance at beginning of year -- -- (1,005)
Issued for exercise of stock options -- -- 377
Issuance of restricted stock 8 -- 92
Issued to employee savings plan 364 405 981
Purchase of treasury stock (427) (405) (445)
Sale of treasury stock 55 -- --
-------- -------- --------
Balance at end of year -- -- --
-------- -------- --------
STOCKHOLDERS' EQUITY Notes 7 and 8 $909,694 $899,599 $864,166
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
37
<PAGE> 39
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1995 1994 1993
- ----------------------- --------- --------- ---------
thousands
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 21,035 $ 41,099 $ 117,408
Adjustments to reconcile net income to net cash provided by
operating activities:
Cumulative effect of changes in accounting principles -- -- (77,403)
Depreciation, depletion and amortization 164,742 172,825 167,699
Amortization of restricted stock 1,718 1,303 1,467
Deferred income taxes 11,544 15,912 35,126
Provisions for impairments of international and geothermal
properties 2,600 3,100 7,000
Cumulative translation losses transferred to the income
statement upon disposition of foreign subsidiary -- 6,065 --
--------- --------- ---------
201,639 240,304 251,297
(Increase) decrease in accounts receivable (12,762) (4,695) 949
(Increase) decrease in inventories (1,439) (3,869) 698
Increase in accounts payable -- trade and other and
accrued expenses 63,760 1,175 20,649
Other items -- net (2,902) 6,772 681
--------- --------- ---------
Net cash provided by operating activities 248,296 239,687 274,274
--------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to properties and equipment (331,214) (422,718) (259,894)
Sales and retirements of properties and equipment 62,847 95,370 4,824
--------- --------- ---------
Net cash used in investing activities (268,367) (327,348) (255,070)
--------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Additions to debt 205,100 180,281 200,000
Retirements of debt (160,373) (93,500) (204,884)
Increase (decrease) in accounts payable, banks (1,438) 959 (2,045)
Dividends paid (17,692) (17,635) (17,217)
Issuance of common stock 5,034 6,326 7,517
Issuance of treasury stock 427 366 1,165
Purchase of treasury stock (427) (405) (445)
--------- --------- ---------
Net cash provided by financing activities 30,631 76,392 (15,909)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH -- -- (329)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 10,560 (11,269) 2,966
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,530 17,799 14,833
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 17,090 $ 6,530 $ 17,799
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
38
<PAGE> 40
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF ACCOUNTING POLICIES
GENERAL Anadarko Petroleum Corporation is engaged in the exploration,
development, production and marketing of natural gas, crude oil, condensate and
natural gas liquids (NGLs). The terms "Anadarko" and "Company" refer to Anadarko
Petroleum Corporation and its subsidiaries. The principal subsidiaries of
Anadarko are: Anadarko Gathering Company; Anadarko Trading Company; and Anadarko
Algeria Corporation (Anadarko Algeria). In December 1994, the Company sold its
wholly-owned subsidiary, Anadarko Petroleum of Canada Ltd. (Anadarko Canada).
See Note 2.
PRINCIPLES OF CONSOLIDATION AND USE OF ESTIMATES The consolidated financial
statements include the accounts of Anadarko and its subsidiaries. All
significant intercompany transactions have been eliminated. The financial
statements have been prepared in conformity with generally accepted accounting
principles appropriate in the circumstances. In preparing financial statements,
management makes informed judgements and estimates that affect the reported
amounts of assets and liabilities as of the date of the financial statements and
affect the reported amounts of revenues and expenses during the reporting
period. Actual results may differ from these estimates.
CHANGES IN ACCOUNTING PRINCIPLES Effective January 1, 1993, Anadarko adopted
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," and SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." See Notes 13 and 15.
REVENUES Natural gas revenues generally are recorded using the sales method,
whereby the Company recognizes natural gas revenues based on the amount of gas
sold to purchasers on its behalf. All other revenues also are recorded using the
sales method.
PRICE RISK MANAGEMENT Anadarko uses derivative financial instruments to
minimize the impact of price fluctuations for the Company and its customers.
Anadarko's financial instruments currently are comprised of futures, swaps and
options. Generally, gains and losses on these activities are recognized in
revenues for the periods to which they relate. Unrealized gains and losses are
recorded as assets and liabilities on the balance sheet. See Note 6.
PROPERTIES AND EQUIPMENT The Company uses the full cost method of accounting
for exploration and development activities as defined by the United States
Securities and Exchange Commission (SEC). Under this method of accounting, the
costs for unsuccessful, as well as successful, exploration and development
activities are capitalized as properties and equipment. This includes any
internal costs that can be directly identified with acquisition, exploration and
development activities, but does not include any costs related to production,
general corporate overhead or similar activities.
The sum of net capitalized costs and estimated future development and
dismantlement costs is amortized using the unit-of-production method. Excluded
from amounts subject to amortization are costs associated with unevaluated
properties and major development projects. On a country-by-country basis, should
the net capitalized costs exceed the estimated present value of future net cash
flows from proved oil and gas reserves, such excess costs would be charged to
current expense. Gain or loss on the sale or other disposition of oil and gas
properties is not recognized unless significant amounts of oil and gas reserves
are involved.
Unsuccessful geothermal exploration costs are charged to expense. All other
properties and equipment are stated at original cost, which does not purport to
represent replacement or market values.
ENVIRONMENTAL CONTINGENCIES The Company accrues for environmental contingencies
when liabilities are likely to occur and reasonable estimates can be made. In
accordance with full cost accounting rules, the Company provides for
environmental clean up costs associated with oil and gas activities as a
component of its depreciation, depletion and amortization expense. Recoveries
from third parties for environmental liabilities are not recognized unless
collection is probable.
39
<PAGE> 41
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF ACCOUNTING POLICIES -- (CONTINUED)
INTEREST CAPITALIZED The Company capitalizes interest on borrowed funds related
to oil and gas expenditures that are not subject to amortization until
completion of evaluation or development activities.
INCOME TAXES The Company, excluding Anadarko Canada, files a U.S. consolidated
federal income tax return. Deferred federal and state income taxes are provided
on all significant temporary differences, except for those essentially permanent
in duration, between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS The financial statements of Anadarko
Canada have been translated to U.S. dollars. All balance sheet accounts are
translated at the current exchange rate and income statement items are
translated at the average exchange rate for the year; resulting translation
adjustments are made directly to a separate component of stockholders' equity.
Transaction adjustments are reported in net income. In prior years, deferred
federal income taxes were not provided on translation adjustments because the
earnings of Anadarko Canada were considered to be permanently invested. Due to
the sale of Anadarko Canada in 1994, the cumulative foreign currency translation
losses were transferred from stockholders' equity and included in disposition of
foreign subsidiary on the income statement. See Note 2.
CASH EQUIVALENTS The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.
ACCOUNTS PAYABLE, BANKS This account represents credit balances to the extent
that checks issued have not been presented to the Company's banks for payment.
2. DISPOSITION OF FOREIGN SUBSIDIARY
In December 1994, Anadarko sold Anadarko Canada for $57,937,000. The sale
price included $17,600,000 for the remaining Canadian properties, as well as
Anadarko Canada's cash and other working capital, which included $34,055,000 of
proceeds from property dispositions earlier in 1994. In connection with the
sale, Anadarko recorded a charge of $5,567,000 before taxes ($6,635,000 after
taxes) primarily due to a non-cash charge of $6,065,000 for cumulative foreign
currency translation losses previously recorded as a reduction in stockholders'
equity.
The gain relating to the sale was taxable in the U.S. As a result, the
Company recorded U.S. income tax expense of $17,454,000 on the taxable gain. The
Company also reversed previously provided deferred Canadian taxes in the amount
of $16,386,000 for a net income tax expense associated with the sale of
$1,068,000.
At the end of 1993, proved reserves of oil and gas for the Canadian
properties were less than three percent of the Company's total proved reserves.
3. CASH AND CASH EQUIVALENTS
As of December 31, 1995, cash and cash equivalents included $4,127,000
invested in U. S. Treasury securities, which the Company has dedicated for an
anticipated "like-kind" property exchange. In addition, as of December 31, 1995,
cash and cash equivalents included $222,000 held by the Executives and Directors
Benefits Trust. There were no similar amounts in cash and cash equivalents as of
December 31, 1994.
40
<PAGE> 42
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. INVENTORIES
Inventories are stated at the lower of average cost or market. NGLs and
natural gas, when sold from inventory, are charged to expense using the
average-cost method. The major classes of inventories are as follows:
<TABLE>
<CAPTION>
thousands 1995 1994
------- -------
<S> <C> <C>
Materials and supplies $13,969 $11,953
Natural gas liquids, stored in inventory 412 842
Natural gas, stored in inventory 478 625
------- -------
$14,859 $13,420
------- -------
</TABLE>
5. PROPERTIES AND EQUIPMENT
A summary of the original cost of properties and equipment by
classification follows:
<TABLE>
<CAPTION>
thousands 1995 1994
--------- ---------
<S> <C> <C>
Oil and gas properties $3,501,162 $3,280,837
Plant facilities 17,600 16,063
Gathering facilities 76,492 68,694
General properties 122,418 80,658
---------- ----------
$3,717,672 $3,446,252
---------- ----------
</TABLE>
Oil and gas properties are amortized using the unit-of-production method.
All other properties are depreciated on the straight-line basis over the useful
lives of the assets, which range from three to 25 years.
Oil and gas properties include costs of $245,577,000 and $262,825,000 at
December 31, 1995 and 1994, respectively, which were excluded from capitalized
costs being amortized. These amounts represent costs associated with unevaluated
properties and major development projects. Anadarko excludes all costs on a
country-by-country basis until proved reserves are found or until it is
determined that the costs are impaired. All excluded costs are reviewed
quarterly to determine if impairment has occurred.
During 1995, 1994 and 1993, the Company made provisions for impairments of
international properties of $600,000, $3,100,000 and $6,500,000, respectively,
which were related to oil and gas properties. These impairments related to
unsuccessful drilling or related activities in Yemen, China and various other
international locations. During 1995 and 1993, the Company made provisions for
impairment of geothermal properties of $2,000,000 and $500,000, respectively.
Total interest costs incurred during 1995, 1994 and 1993 were $52,557,000,
$41,635,000 and $38,000,000, respectively. Of these amounts, the Company
capitalized $16,199,000, $15,507,000 and $8,577,000 during 1995, 1994 and 1993,
respectively. Capitalized interest is included as part of the cost of oil and
gas properties. The capitalization rates are based on the Company's weighted
average cost of borrowings used to finance the expenditures.
In addition to capitalized interest, the Company also capitalized internal
costs of $40,617,000, $37,898,000 and $34,637,000 during 1995, 1994 and 1993,
respectively. These internal costs were directly related to acquisition,
exploration and development activities and are included as part of the cost of
oil and gas properties.
41
<PAGE> 43
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. LONG-TERM DEBT AND FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
Principal
-------------------------
thousands 1995 1994
-------- --------
<S> <C> <C>
Notes Payable, Banks* $154,100 $ 49,000
Commercial Paper* 19,908 180,281
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
7 1/4% Debentures due 2025 100,000 --
------- -------
$674,008 $629,281
------- -------
</TABLE>
- ---------------
*The average rates in effect at December 31, 1995 and 1994 were 5.95% and 6.46%,
respectively for the Notes Payable, Banks and 5.96% and 6.49%, respectively for
the Commercial Paper.
Anadarko has noncommitted lines of credit from several banks. The general
provisions of these lines of credit provide for Anadarko to borrow funds for
terms and rates offered from time to time by the banks. There are no fees
associated with these lines of credit.
The Company has a commercial paper program that allows Anadarko to borrow
funds, at rates as offered, by issuing notes to investors for terms of up to 270
days.
The notes payable to banks and commercial paper in 1995 and 1994 have been
classified as long-term debt in accordance with SFAS No. 6, "Classification of
Short-term Obligations Expected to be Refinanced," under the terms of Anadarko's
Bank Credit Agreements.
In March 1995, Anadarko issued $100,000,000 principal amount of 7 1/4%
Debentures due 2025 under the shelf registration with the SEC. Each Debenture
holder has the one-time right to have the Company purchase on March 15, 2000,
all or a portion of, the Debenture at a purchase price equal to par plus accrued
and unpaid interest. Net proceeds from the offering were used to fix floating
interest rate debt.
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. In May 1995, the Agreements were amended to include 12
commercial banks and extend the expiration date of the Agreements for one year.
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
2000. During 1995 and 1994, there were no outstanding borrowings under these
Agreements.
During 1995 and 1994, the Company had available $20,000,000 in a bank line
of credit which was not used. The maximum interest rate for loans against the
line was the reference rate of the bank. The line of credit is renewable
annually, but may be withdrawn at any time by the bank. In 1995 and 1994,
Anadarko maintained an average daily compensating balance of $1,000,000 for this
line of credit.
In October 1993, Anadarko filed a shelf registration with the SEC that
permits the issuance of up to $300,000,000 in senior and subordinated debt
securities and equity securities. Net proceeds, terms and pricing of offerings
of securities issued under the shelf registration will be determined at the time
of the offering. Anadarko has used similar shelf registrations since 1989 to
provide added flexibility in financing strategies. As of December 31, 1995,
$100,000,000 principal amount of securities had been issued under the shelf
registration.
Total sinking fund and installment payments related to long-term debt for
the five years ending December 31, 2000 are shown below. The payments related to
the redemption of the notes payable to banks
42
<PAGE> 44
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. LONG-TERM DEBT AND FINANCIAL INSTRUMENTS -- (CONTINUED)
and commercial paper are included in the amounts shown in a manner consistent
with the terms for repayment of the Revolving Credit Agreement.
<TABLE>
<CAPTION>
thousands
<S> <C>
1996 $ --
1997 --
1998 100,000
1999 --
2000 $174,008
</TABLE>
The following information discloses the fair value of the Company's
financial instruments:
<TABLE>
<CAPTION>
thousands CARRYING AMOUNT FAIR VALUE
--------------- ----------
<S> <C> <C>
1995
Cash and cash equivalents $ 17,090 $ 17,090
Long-term debt 674,008 702,008
Derivative financial instruments
Asset 4,447 4,447
Liability (7,898) (7,898)
1994
Cash and cash equivalents $ 6,530 $ 6,530
Long-term debt 629,281 603,656
Derivative financial instruments
Asset 3,323 3,323
Liability (2,889) (2,889)
</TABLE>
CASH AND CASH EQUIVALENTS The carrying amount reported on the balance sheet
approximates fair value.
LONG-TERM DEBT The fair value of long-term debt at December 31, 1995 and 1994
is the value the Company would have to pay to retire the debt, including any
premium or discount to the debt holder for the differential between stated
interest rate and year-end market rate. The fair values are based on quoted
market prices from Standard & Poor's Bond Guide and, where such quotes were not
available, on the average rate in effect at year-end.
DERIVATIVE FINANCIAL INSTRUMENTS Anadarko uses derivative financial
instruments -- futures, swaps and options -- to fix a price on the Company's
production volumes or to convert a customer's requested price structure to a
price structure that is consistent with the Company's overall pricing strategy.
Gains and losses generally are recorded when the related gas or oil production
had been produced or delivered or the financial instrument expires. As a result,
gains and losses are generally offset by similar changes in the price of natural
gas and crude oil. Unrealized gains and losses are recorded as assets and
liabilities on the balance sheet at fair market value as of the balance sheet
date. The unrealized gains and losses include January hedges deferred as of
December 31 and exclude certain written options recognized in 1995. All volumes
exclude January hedges not open and written options recognized. While financial
instruments are intended to reduce the Company's exposure to declines in the
market price of natural gas and crude oil, the financial instruments may limit
Anadarko's gain from increases in the market price of natural gas and crude oil.
The fair value of derivative financial instruments reflects the estimated
amounts that the Company would receive or pay to settle the contracts as of
December 31. Dealer quotes are available for the majority of the Company's
derivatives.
43
<PAGE> 45
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. LONG-TERM DEBT AND FINANCIAL INSTRUMENTS -- (CONTINUED)
FUTURES Anadarko uses futures contracts to hedge the Company's production
volume exposure to price risk and to minimize the Company's customers' exposure
to price risk. Futures contracts have settlement guaranteed by the New York
Mercantile Exchange (NYMEX) and have nominal credit risk.
At year-end 1995, Anadarko had open futures contracts related to sales
totaling 66 million cubic feet per day (MMcf/d) of the Company's natural gas
sales for February through March 1996. The Company had open futures contracts
for its natural gas production of 14 MMcf/d for April through November 1996. The
Company had open gas futures contracts for its customers of 1.3 MMcf/d for
February through March and 0.6 MMcf/d for April through October and December
1996. Anadarko had open crude oil futures contracts related to sales of 3.4
thousand barrels per day (MBbls/d) for February 1996.
At year-end 1994, Anadarko had open futures contracts totaling 35 MMcf/d of
the Company's natural gas production for February through April 1995 and August
through September 1995. Anadarko also had open futures contracts for the
Company's natural gas customers of 3 MMcf/d for February through September 1995.
SWAPS Anadarko uses swap agreements with third-parties to hedge against
potential adverse effects of fluctuations in future prices for the Company's
production and for the Company's customers. In addition, Anadarko uses basis
swap agreements to hedge against potential adverse effects of fluctuations in
the price differential between the NYMEX price at Henry Hub and the price at the
market location of Anadarko's production or a customer's market location
requirements. These energy swap agreements expose the Company to third-party
credit risk to the extent the third-parties are unable to meet their monthly
settlement commitment to the Company. The Company monitors the credit standing
of the third-parties and anticipates they will be able to fully satisfy their
contractual obligations.
At year-end 1995, Anadarko had open basis swap agreements for the Company's
gas production averaging 64 MMcf/d for January through December 1996 and 30
MMcf/d for 1997, 1998 and 1999, which were offset by open basis swap agreements
of like amounts for the same periods, thus eliminating the risk to Anadarko from
future price changes related to these two positions. The Company also had open
gas swap agreements related to its production averaging 7 MMcf/d for January
through December 1996 and for its customers of 9 MMcf/d for February through
December 1996.
At year-end 1994, Anadarko had open basis swap agreements for the Company's
production averaging 119 MMcf/d for the entire year of 1995 and averaging 30
MMcf/d for the years 1996 through 1999. In addition, the Company had open swap
agreements for its customers of 20 MMcf/d for the year 1995 and open basis swap
agreements for its customers of 28 MMcf/d for January through August 1995.
The swap agreements open at year-end 1994 included a swap agreement entered
into in December 1993 for which Anadarko received a prepayment of $27,254,000.
This swap was in conjunction with a fixed price gas purchase agreement that
required Anadarko to make a $27,254,000 prepayment for gas, which was delivered
over the term of the swap agreement. Under the swap agreement, the Company made
payments to a third-party, based on an index price equal to the market value of
the gas purchased under the related gas purchase agreement. The settlement
period was the first of each month effective April 1994 through March 1995. The
carrying amounts reported on the balance sheet represent fair value at year-end
1994. The effect of the swap agreement was to convert the fixed price obligation
to purchase gas into a market price obligation.
OPTIONS The Company generally uses options to fix a floor and a ceiling for
prices (a "collar") on its production volumes. The Company also has used options
to "straddle" a price, effectively setting a price above the then present market
price at which the Company is willing to sell production volumes and a price
below the then present market price at which the Company is willing to buy to
supply third-party markets. Like futures, NYMEX options have settlement
guaranteed and have nominal credit risk. Over-the-counter (OTC) options with
third-parties have credit risks similar to swaps.
44
<PAGE> 46
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. LONG-TERM DEBT AND FINANCIAL INSTRUMENTS -- (CONTINUED)
At year-end 1995, Anadarko had open NYMEX options of 183 MMcf/d for puts
and 61 MMcf/d for calls during February through March 1996 and 30 MMcf/d for
puts and 20 MMcf/d for calls for April through November 1996 in order to fix a
price range on gas sales. In addition, the Company had open crude oil options on
1.7 MBbls/d for puts and 4.5 MBbls/d for calls during February through March
1996.
At year-end 1994, Anadarko had open NYMEX options on 57 MMcf/d for puts and
for calls in order to fix a range of prices for the Company's natural gas
production during February through April 1995.
INTEREST RATE SWAP OPTION AGREEMENT In October 1993, Anadarko accepted a
payment of $2,600,000 granting the purchaser the option to enter into a
nine-year interest rate swap agreement with the Company. The option was
exercisable in October 1994. This agreement, if exercised, would have
effectively fixed the rate the Company would have paid 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 and, as a result, the Company
recorded a reduction to interest expense of $2,600,000 during the fourth quarter
of 1994.
7. STOCK AND STOCK OPTIONS
Following is a schedule of the changes in the Company's shares of common
stock:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
SHARES OF COMMON STOCK ISSUED
Beginning of year 58,857,290 58,668,407 55,345,486
Exercise of stock options 58,240 91,829 213,054
Issuance of restricted stock 26,950 31,950 110,700
Issuance of shares for employee savings plan 73,565 65,104 81,891
Issuance of shares for executives and directors
benefit trust 1,000,000 -- --
Conversion of 6 1/4% Debentures -- -- 2,917,276
---------- ---------- ----------
End of year 60,016,045 58,857,290 58,668,407
---------- ---------- ----------
SHARES OF COMMON STOCK HELD IN TREASURY
Beginning of year -- -- 34,235
Issuance of shares for exercise of stock options -- -- (12,398)
Issuance of shares for employee savings plan (9,008) (7,257) (30,746)
Issuance of restricted stock -- -- (3,150)
Purchase of treasury stock 10,395 7,257 12,059
Sale of treasury stock (1,387) -- --
---------- ---------- ----------
End of year -- -- --
---------- ---------- ----------
SHARES OF COMMON STOCK HELD FOR EXECUTIVES AND
DIRECTORS BENEFITS TRUST
Beginning of year -- -- --
Purchase of shares 1,000,000 -- --
---------- ---------- ----------
End of year 1,000,000 -- --
---------- ---------- ----------
SHARES OF COMMON STOCK OUTSTANDING AT END OF YEAR 59,016,045 58,857,290 58,668,407
---------- ---------- ----------
</TABLE>
In each quarter of 1995, 1994 and 1993, 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 $259,694,000, $249,599,000 and $464,166,000 were
not restricted as to the payment of dividends at December 31, 1995, 1994 and
1993, respectively.
During 1995, 1994 and 1993, the Company acquired treasury stock only as a
result of stock option exercises, restricted stock transactions or buyback of
shares, which were unsolicited from stockholders.
45
<PAGE> 47
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. STOCK AND STOCK OPTIONS -- (CONTINUED)
In May 1995, the Company issued 1,000,000 shares of common stock to the
Anadarko Petroleum Corporation Executives and Directors Benefits Trust (Trust)
to secure present and future unfunded benefit obligations of the Company. The
shares issued to the Trust are not considered outstanding for quorum or voting
calculations, but the Trust will receive dividends. The shares are included in
the calculation of earnings per share under the treasury stock method and have
no dilutive effect. The fair market value of these shares is included in common
stock and paid-in capital and as a reduction to stockholders' equity. As of
December 31, 1995, there were 1,000,000 shares in the Trust.
Anadarko has four stock option plans -- the 1993 Stock Incentive Plan, the
1988 Stock Option Plan for Non-employee Directors, the 1987 Stock Option Plan
and the 1986 Stock Option Plan -- under which key employees and directors of the
Company may be granted options to purchase shares of Anadarko common stock.
Incentive stock options and non-qualified stock options have a maximum term of
ten years from the date of grant and are issued at the market value of Anadarko
stock on the date of grant. The options vest over time and may be exercised no
earlier than one year from the date of grant.
In addition, the 1993 Stock Incentive Plan and the 1987 Stock Option Plan
provide that up to 800,000 and 400,000 shares of common stock, respectively,
which may be granted under the Plans, may be granted as restricted stock.
Generally, restricted stock is subject to forfeiture restrictions and cannot be
sold, transferred or disposed of during the restriction period. The holders of
the restricted stock have all the rights of a stockholder of the Company with
respect to such shares, including the right to vote and receive dividends or
other distributions paid with respect to such shares. During 1995, 1994 and
1993, the Company issued 26,950, 31,950 and 110,700 shares, respectively, of
restricted stock at a market value of $1,106,000, $1,668,000 and $4,522,000,
respectively.
Unexercised stock options do not have a dilutive effect on earnings per
common share. Information regarding the Company's stock option plans is
summarized below:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
SHARES UNDER OPTION AT BEGINNING OF YEAR 2,106,675 1,819,012 1,931,535
Granted 518,259 431,950 540,350
Exercised (119,382) (142,787) (628,873)
Surrendered or expired (14,000) (1,500) (24,000)
------------- ------------- -------------
SHARES UNDER OPTION AT END OF YEAR 2,491,552 2,106,675 1,819,012
------------- ------------- -------------
Option price range per share
at December 31 $19.68-$48.00 $16.79-$49.00 $16.60-$47.00
------------- ------------- -------------
Options exercisable at December 31 1,730,800 1,433,050 1,213,737
------------- ------------- -------------
Price range per share
of options exercised $19.68-$31.75 $19.68-$47.00 $16.60-$37.00
------------- ------------- -------------
SHARES AVAILABLE FOR FUTURE GRANT AT END OF
YEAR 3,186,241 3,690,500 4,120,950
------------- ------------- -------------
</TABLE>
SFAS No. 123, "Accounting for Stock-Based Compensation" defines a fair
value based method of accounting for an employee stock option or similar equity
instrument. SFAS No. 123 allows an entity to continue to measure compensation
costs for these plans using the current method of accounting. Anadarko has
elected to continue to use the current method of accounting for employee stock
compensation plans and, beginning in 1996, will disclose the fair values as
defined in SFAS No. 123.
46
<PAGE> 48
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
The Company's currency translation adjustments are related to Anadarko
Canada, which was sold in 1994. See Note 2. The following is an analysis of
currency translation adjustments reflected in stockholders' equity:
<TABLE>
<CAPTION>
thousands 1994 1993
------- -------
<S> <C> <C>
Balance at beginning of year $(4,379) $(2,678)
Current translation losses (1,686) (1,701)
Cumulative translation losses transferred to the income
statement upon disposition of foreign subsidiary 6,065 --
------- -------
Balance at end of year $ -- $(4,379)
------- -------
</TABLE>
9. STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION
The amounts of cash paid (received) for interest (net of amounts
capitalized) and income taxes are as follows:
<TABLE>
<CAPTION>
thousands 1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
Interest $32,801 $ 25,675 $ 26,840
Income taxes paid (received) $(3,803) $ 516 $ 5,726
</TABLE>
In July 1993, $99,778,000 principal amount of the 6 1/4% Convertible
Subordinated Debentures due 2014 were converted into 2,917,276 shares of
Anadarko common stock.
10. TRANSACTIONS WITH RELATED PARTIES AND MAJOR CUSTOMERS
During 1989, Anadarko Algeria entered into a Production Sharing Agreement
(PSA) with SONATRACH, the national oil and gas enterprise of Algeria. SONATRACH
is the beneficial owner of 10.2 percent of the Company's common stock. The PSA
gives Anadarko Algeria the right to explore for and produce liquid hydrocarbons
in Algeria, subject to the sharing of production with SONATRACH. The PSA
provides for a commitment from Anadarko Algeria of over $100,000,000 of
exploration costs (including the cost of certain assets) over a ten-year period,
subject to certain provisions. Anadarko Algeria has two partners in the PSA,
which share in the exploration cost commitment. This obligation was fully met in
1995. During 1994, the Company acquired a minority interest in a PSA covering
two additional blocks in the same region, which are operated by BHP Petroleum
(Algerie) Inc., where an exploration program is already underway. Approximately
$432,000 and $30,000 was paid to SONATRACH in 1995 and 1994, respectively, for
charges related to equipment usage. The Company believes anticipated operating
cash flows and existing credit facilities will be sufficient to meet its share
of the exploration and development costs. As of December 31, 1995, Anadarko
Algeria's total net investment in Algeria for exploration and related activities
was $146,706,000, of which approximately $40,860,000 was incurred in 1995.
The current political unrest in Algeria has been the subject of numerous
media reports. Although Anadarko was encouraged by the democratic elections held
in November 1995, the Company is closely monitoring the situation and has taken
reasonable and prudent steps to ensure the safety of employees working in the
remote regions of the Sahara Desert. Anadarko is presently unable to predict
with certainty any effect the current situation may have on activity planned for
1996 and beyond. However, the situation has not had any material effect on the
Company's operations. The Company's activities in Algeria also are subject to
the general risks associated with all foreign operations.
The Company purchases oilfield services from a number of companies
including Dresser Industries, Inc. and its affiliates and subsidiaries. The
aggregate amount paid to Dresser Industries, Inc. and its affiliates and
47
<PAGE> 49
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. TRANSACTIONS WITH RELATED PARTIES AND MAJOR CUSTOMERS -- (CONTINUED)
subsidiaries was approximately $2,782,000 in 1995, $4,092,000 in 1994 and
$641,000 in 1993. James L. Bryan, a director of the Company, is Senior Vice
President Operations of Dresser Industries, Inc.
Approximately $155,000 was paid to L. G. Barcus and Sons, Inc. during 1993
for consulting fees concerning the construction of facilities for the Company in
1993. There were no amounts paid by the Company to L.G. Barcus and Sons, Inc.
during 1995 and 1994. Larry Barcus, a director of the Company, is the Chairman
of L. G. Barcus and Sons, Inc., a general contractor with operations nationwide.
The Company's natural gas is sold to interstate and intrastate gas
pipelines, direct end-users, industrial users, local distribution companies and
gas marketers. Crude oil and condensate are sold to marketers, gatherers and
refiners. NGLs are sold to direct end-users, refiners and marketers. These
purchasers are located in the United States, Canada and Mexico. The majority of
the Company's receivables are paid within two months following the month of
purchase.
The Company generally performs a credit analysis of customers prior to
making any sales to new customers. Based upon this credit analysis, the Company
may require a standby letter of credit or a financial guarantee.
In 1995, sales to Indiana Gas Company Incorporated were $53,130,000 and
sales to Texaco Trading & Transportation Company were $53,092,000, each of which
accounted for more than ten percent of the Company's total revenues. In 1994,
sales to Indiana Gas Company Incorporated were $67,348,000, which was more than
ten percent of the Company's total revenues. In 1993, sales to CNG Transmission
Corporation and its subsidiaries were $75,378,000 (of which $60,191,000 were to
East Ohio Gas Company, a wholly-owned subsidiary of CNG) and sales to Indiana
Gas Company Incorporated were $65,754,000, each of which accounted for more than
ten percent of the Company's total revenues.
11. OPERATING EXPENSES
Operating expenses by category are as follows:
<TABLE>
<CAPTION>
thousands 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Oil and gas $ 68,506 $ 70,164 $ 67,668
Plant and gathering 26,119 24,905 23,750
Gas purchases 10,123 14,292 12,016
Other 1,081 841 938
------- ------- -------
Total $ 105,829 $ 110,202 $ 104,372
------- ------- -------
</TABLE>
12. OTHER TAXES
Significant taxes other than income taxes are as follows:
<TABLE>
<CAPTION>
thousands 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Production and severance $ 16,898 $ 22,228 $ 22,049
Ad valorem 16,624 16,786 15,679
Payroll and other 3,370 1,959 3,769
------ ------ ------
Total $ 36,892 $ 40,973 $ 41,497
------ ------ ------
</TABLE>
48
<PAGE> 50
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
13. INCOME TAXES
Income tax expense, including deferred amounts, is summarized as follows:
<TABLE>
<CAPTION>
thousands 1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
CURRENT
Federal $(3,385) $ 5,798 $ 1,469
Foreign -- 1,422 766
State 72 435 35
------- -------- -------
Total (3,313) 7,655 2,270
------- -------- -------
DEFERRED
Federal 11,056 29,838 22,925
Adjustment to the deferred tax liability and assets at the
enactment date for the change in the corporate income tax
rate -- -- 11,249
Foreign -- (16,224) (141)
State 488 2,298 1,093
------- -------- -------
Total 11,544 15,912 35,126
------- -------- -------
Total income taxes allocated to Income before Income Taxes
and Cumulative Effect of Changes In Accounting Principles $ 8,231 $ 23,567 $37,396
------- -------- -------
</TABLE>
Total income taxes were different than the amounts computed by applying the
statutory income tax rate to Income before Income Taxes and Cumulative Effect of
Changes in Accounting Principles. The sources of these differences are as
follows:
<TABLE>
<CAPTION>
thousands 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Income before Income Taxes and Cumulative Effect of Changes
in Accounting Principles Domestic $36,663 $63,963 $77,059
Foreign (7,397) 703 342
------- ------- -------
Total $29,266 $64,666 $77,401
------- ------- -------
Statutory tax rate 35% 35% 35%
Tax computed at statutory tax rate $10,243 $22,633 $27,090
Adjustments resulting from:
State income taxes (net of federal income tax benefit) 364 1,777 733
Section 29 credit (1,865) (3,072) (718)
Disposition of foreign subsidiary -- 3,017 --
Adjustment to the beginning of year deferred tax
liabilities and assets for the change in the corporate
income tax rate -- -- 10,741
Cash surrender value and death benefits, net of premiums (566) (759) (436)
Other -- net 55 (29) (14)
------- ------- -------
Total income taxes $ 8,231 $23,567 $37,396
------- ------- -------
Effective tax rate 28% 36% 48%
------- ------- -------
</TABLE>
The tax benefit of compensation expense for tax purposes in excess of
amounts recognized for financial accounting purposes has been credited directly
to stockholders' equity. For 1995, 1994 and 1993, the tax benefit amounted to
$458,000, $968,000 and $2,743,000, respectively.
SFAS No. 109 was adopted by the Company in the first quarter of 1993 and
increased net income by $87,071,000. SFAS No. 109 requires a change from the
deferred method of accounting for income taxes to the asset and liability
method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates applicable to those years in which the temporary
differences between financial statement
49
<PAGE> 51
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
13. INCOME TAXES -- (CONTINUED)
carrying amounts and tax bases are expected to be recovered or settled. The
effect of a change in tax rates on deferred tax assets and liabilities is
recognized in income in the period when the change is enacted.
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 earnings of
$11,249,000 in the third quarter of 1993.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax liabilities (assets) at December 31, 1995 and 1994
are as follows:
<TABLE>
<CAPTION>
thousands 1995 1994
-------- --------
<S> <C> <C>
Oil and gas exploration and development costs $495,757 $473,043
Other 18,675 14,391
-------- --------
Gross deferred tax liabilities 514,432 487,434
-------- --------
Alternative minimum tax credit carryforward (25,170) (28,752)
Other (39,464) (19,998)
-------- --------
Gross deferred tax assets (64,634) (48,750)
-------- --------
Net deferred tax liabilities $449,798 $438,684
-------- --------
</TABLE>
The Company has determined that it is more likely than not that the
deferred tax assets will be realized and a valuation allowance for such assets
is not required.
In December 1994, the Company sold Anadarko Canada. Under current
accounting rules, Anadarko had not previously provided deferred U.S. income
taxes on the amount by which its investment in Anadarko Canada exceeded the tax
basis or on the cumulative foreign currency translation losses because these
temporary differences were previously considered permanent in duration. See Note
2.
Net operating loss and alternative minimum tax credit carryforwards at
December 31, 1995, which are available for future utilization on federal income
tax returns, are as follows:
<TABLE>
<CAPTION>
ALTERNATIVE
REGULAR MINIMUM
thousands TAX TAX EXPIRATION
------- ----------- -----------
<S> <C> <C> <C>
Net operating loss $48,700 $38,200 1998 - 2010
Alternative minimum tax credit $25,200 $ -- Unlimited
</TABLE>
The alternative minimum tax credit can be carried forward indefinitely as a
credit against regular tax liability. The alternative minimum tax credit has
reduced deferred federal income tax expense. To the extent the cumulative
remaining carryforward is utilized against future income taxes, accumulated
deferred income taxes will be restored at the then current rate.
14. LEASE COMMITMENTS
The Company has various commitments under non-cancelable operating lease
agreements for buildings, facilities and equipment, the majority of which expire
at various dates through 2002. The leases are expected
50
<PAGE> 52
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
14. LEASE COMMITMENTS -- (CONTINUED)
to be renewed or replaced as they expire. At December 31, 1995, future minimum
rental payments due under operating leases are as follows:
<TABLE>
<CAPTION>
thousands
<S> <C>
1996 $ 9,880
1997 9,379
1998 9,053
1999 8,760
2000 8,788
Later years 14,713
-------
Total minimum lease payments $60,573
-------
</TABLE>
Total rental expense amounted to $9,858,000, $8,441,000 and $9,207,000 in
1995, 1994 and 1993, respectively.
15. PENSION PLANS, EMPLOYEE SAVINGS PLAN AND OTHER POSTRETIREMENT BENEFITS
PENSION PLANS The Company has a non-contributory defined benefit pension plan
covering all permanent employees, except certain employees in foreign countries.
The benefits for this plan are based primarily on years of service and pay near
retirement. Plan assets consist principally of fixed income investments and
equity securities. The Company funds the plan with annual contributions as
determined in accordance with the Employee Retirement Income Security Act of
1974 and Internal Revenue Code limitations.
In 1994, the Plan was amended, effective January 1, 1992, to bring the
definition of compensation in compliance with Section 414(s) of the Internal
Revenue Code of 1986, as amended. Effective January 1, 1993, a rollover
provision was added to the Plan allowing a member's retirement benefit to be
rolled over to another qualified pension plan or Individual Retirement Account.
Effective January 1, 1994, a section was added preserving benefits of those
members whose accrued benefit under the Plan was determined based on
compensation received prior to January 1, 1994, which exceeded the limit on
compensation which may be considered for Plan purposes commencing January 1,
1994. Also effective January 1, 1994, provisions were added to clarify the
treatment of employees of Anadarko Canada who transfer their employment to
Anadarko. Finally, effective July 1, 1994, a section was added to the Plan to
allow members who had attained age 50 by July 1, 1994, to retire from Anadarko
with a pension benefit as if they had attained age 55, if they were working at
one of two specific locations and whose employment was terminated in conjunction
with the closing of these specific locations.
The Company has an equalization plan to ensure payments to certain
employees of amounts to which they are already entitled under the provisions of
the pension plan, but which are subject to limitations imposed by federal tax
laws. This plan is unfunded and payable solely from the general assets of the
Company. In addition, the Company has a pension plan for non-employee directors,
which is unfunded.
The 1995, 1994 and 1993 pension cost related to these plans includes the
following components:
<TABLE>
<CAPTION>
thousands 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Service costs-benefits earned in the period $ 3,415 $ 3,502 $ 2,785
Interest cost on projected benefit obligation 2,991 2,895 2,612
Actual (return) loss on plan assets (9,227) 1,208 (3,675)
Amortization values and deferrals 6,165 (4,560) 111
Termination benefits -- 346 --
------- ------- -------
Pension cost $ 3,344 $ 3,391 $ 1,833
------- ------- -------
</TABLE>
51
<PAGE> 53
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
15. PENSION PLANS, EMPLOYEE SAVINGS PLAN AND OTHER POSTRETIREMENT
BENEFITS -- (CONTINUED)
The special termination benefits incurred in 1994 relate to the closing of
several plant locations.
The Company had an additional minimum liability of $1,301,000 and
$1,591,000 at December 31, 1995 and 1994, respectively, which represents the
difference between the unfunded accumulated benefit obligation and the accrued
pension cost related to the equalization plan. This liability was offset by an
intangible asset of an equal amount.
The funded status of the plans at December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS EXCEED
BENEFITS ASSETS
thousands (FUNDED) (UNFUNDED)
------------- ---------------
<S> <C> <C>
1995
Actuarial present value of:
Vested benefit obligation $29,549 $ 3,913
Accumulated benefit obligation 35,899 4,213
Projected benefit obligation $48,437 $ 6,210
------- ---------
Plan assets at market value $46,505 $ --
------- ---------
Projected benefit obligation in excess of plan assets $(1,932) $ (6,210)
Unrecognized initial asset (5,197) --
Unrecognized loss 3,861 1,905
Unrecognized prior service cost 1,467 1,261
Adjustment required to recognize additional minimum
liability -- (1,301)
------- ---------
Prepaid (accrued) pension cost $(1,801) $ (4,345)
------- ---------
1994
Actuarial present value of:
Vested benefit obligation $19,040 $ 2,675
Accumulated benefit obligation 23,896 3,535
Projected benefit obligation $33,668 $ 4,387
------- ---------
Plan assets at market value $37,734 $ --
------- ---------
Projected benefit obligation less than (in excess of) plan
assets $ 4,066 $ (4,387)
Unrecognized initial asset (5,724) --
Unrecognized loss 469 855
Unrecognized prior service cost 1,784 1,483
Adjustment required to recognize additional minimum
liability -- (1,591)
------- ---------
Prepaid (accrued) pension cost $ 595 $ (3,640)
------- ---------
</TABLE>
52
<PAGE> 54
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
15. PENSION PLANS, EMPLOYEE SAVINGS PLAN AND OTHER POSTRETIREMENT
BENEFITS -- (CONTINUED)
The Company's assumptions used as of December 31 in determining the pension
liability were as follows:
<TABLE>
<CAPTION>
percent 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.25 8.0 7.25
Rates of increase in compensation levels 5.0 5.0 5.0
Long-term rate of return on plan assets 8.0 8.0 8.0
</TABLE>
EMPLOYEE SAVINGS PLAN The Company has an employee savings plan (ESP) that is a
defined contribution plan. The Company matches a portion of employees'
contributions with shares of the Company's common stock. Participation in the
ESP is voluntary and all regular employees of the Company are eligible to
participate. The Company charged to expense plan contributions of $3,731,000,
$3,579,000 and $3,426,000 during 1995, 1994 and 1993, respectively.
OTHER POSTRETIREMENT BENEFITS As of January 1, 1993, the Company adopted SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions". The Company recognized the cumulative transition obligation of
$19,767,000 as the effect of an accounting change in the first quarter of 1993,
resulting in a decrease to net income of $9,668,000 (net of $5,416,000 deferred
income tax benefit).
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for retired employees. Substantially all
of the Company's employees, including employees in foreign countries, may become
eligible for these benefits if they reach retirement age while working for the
Company. These benefits and similar benefits for active employees are provided
through contributory and noncontributory benefit plans.
Health care benefits are funded by contributions from the Company and its
employees, with retiree contributions adjusted per the provisions of the
Company's health care plans. The Company's current policy is to fund the cost of
postretirement health care benefits on a pay-as-you-go basis. The Company's
retiree life insurance plan is noncontributory and is currently fully funded
through insurance premiums paid by the Company.
The following table sets forth the Company's postretirement benefits other
than pension combined liability as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------- ----------
<S> <C> <C>
thousands
Accumulated postretirement benefit obligation
Retirees $ (7,610) $ (6,344)
Fully eligible active plan participants (3,337) (3,538)
Other active plan participant (12,472) (11,321)
-------- --------
Total (23,419) (21,203)
Plan assets at fair value -- --
-------- --------
Accumulated postretirement benefit obligation in excess of plan assets (23,419) (21,203)
Unrecognized net gain (4,343) (3,887)
-------- --------
Accrued postretirement benefit cost $(27,762) $(25,090)
-------- --------
</TABLE>
53
<PAGE> 55
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
15. PENSION PLANS, EMPLOYEE SAVINGS PLAN AND OTHER POSTRETIREMENT
BENEFITS -- (CONTINUED)
The Company charges postretirement benefits other than pensions as accrued,
based on actuarial calculations for each plan. The net annual costs for
postretirement benefits other than pensions for 1995 and 1994 included the
following components:
<TABLE>
<CAPTION>
thousands 1995 1994
------ ------
<S> <C> <C>
Service cost-benefits attributed to service during the period $1,556 $1,575
Interest cost on accumulated obligation 1,674 1,863
Actual return on plan assets -- (260)
Special termination expense -- 44
Recognized benefit gain (119) --
------ ------
Net postretirement benefit cost $3,111 $3,222
------ ------
</TABLE>
The Company's assumptions used as of December 31 in determining the
accumulated postretirement benefit obligation shown above were as follows:
<TABLE>
<CAPTION>
percent 1995 1994
--------- ----------
<S> <C> <C>
Discount rate 7.25 8.0
Rates of increase in compensation levels 5.0 5.0
Health care trend rate 13.0-5.0 15.0-5.0
</TABLE>
The health care trend rate for the health care plans starts at the maximum
rate for the current year and is gradually reduced to an ultimate rate for 2001
and later years. A change in the health care trend rate of one percent would
change the annual cost in 1995 by approximately $522,000 and would change the
accumulated postretirement benefit obligation in 1995 by approximately
$3,089,000.
16. 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.
Anadarko concluded the settlement with the EPA in December 1995 for $8,040.
54
<PAGE> 56
ANADARKO PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
16. CONTINGENCIES -- (CONTINUED)
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 be approximately $35,000 to $70,000 and will not have a
material effect on its financial position, cash flows or results of operations.
As part of the 1992 acquisition of properties from Atlantic Richfield
Company (ARCO), the Company conducted an extensive environmental audit of the
acquired properties. To the extent that significant environmental problems were
found to exist during the audit, ARCO had contractually agreed, with certain
limitations, to correct such problems or take back the affected properties and
refund the pro rata share of the purchase price attributable to the properties
pursuant to the terms of the underlying asset purchase and sale agreement.
Periodic discussions with ARCO continue to be held to determine the level of
compensation due the Company from ARCO for certain environmental conditions
which have been found on the properties. The Company believes any liability in
connection with any environmental conditions existing as of the date of purchase
on the properties rests with ARCO and, as such, the Company believes it will not
have any material potential liability related to the properties.
55
<PAGE> 57
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL QUARTERLY INFORMATION
(UNAUDITED)
QUARTERLY FINANCIAL DATA
The following table shows summary quarterly financial data for 1995 and
1994. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" under Item 7 of this Form 10-K.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
thousands except per share amounts QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1995
Operating revenues $102,827 $113,890 $ 99,283 $118,014
Operating income, pretax 14,363 22,246 8,535 19,330
Net income $ 4,080 $ 9,053 $ 1,107 $ 6,795
Earnings per common share $ 0.07 $ 0.15 $ 0.02 $ 0.12
1994
Operating revenues $133,629 $121,062 $112,511 $115,274
Operating income, pretax 33,803 22,829 20,887 16,719
Net income $ 17,062 $ 11,683 $ 10,305 $ 2,049
Earnings per common share $ 0.29 $ 0.20 $ 0.18 $ 0.03
</TABLE>
56
<PAGE> 58
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
OIL AND GAS PRODUCTION
The following is historical revenue and cost information relating to the
Company's oil and gas operations. Excluded from amounts subject to amortization
as of December 31, 1995 and 1994 are $245,577,000 and $262,825,000,
respectively, of costs associated with unevaluated properties and major
development projects. The majority of the evaluation activities are expected to
be completed within five years.
COSTS EXCLUDED FROM AMORTIZATION
<TABLE>
<CAPTION>
EXCLUDED
YEAR COSTS INCURRED COSTS AT
PRIOR -------------------------------- DEC. 31,
thousands YEARS 1993 1994 1995 1995
------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Property acquisition $ 6,717 $14,673 $ 79,323 $ 3,970 $104,683
Exploration 19,300 18,607 20,330 57,167 115,404
Capitalized interest 1,802 5,510 7,245 10,933 25,490
------- ------- -------- ------- --------
Total $27,819 $38,790 $106,898 $72,070 $245,577
------- ------- -------- ------- --------
</TABLE>
CAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
thousands 1995 1994
---------- ----------
<S> <C> <C>
UNITED STATES
Capitalized
Unproved properties $ 160,186 $ 205,117
Proved properties 3,178,437 2,964,367
Plant facilities 17,600 16,063
---------- ----------
3,356,223 3,185,547
Accumulated depreciation, depletion and amortization 1,584,998 1,426,480
---------- ----------
Net capitalized costs 1,771,225 1,759,067
---------- ----------
ALGERIA AND OVERSEAS
Capitalized
Unproved properties 100,128 82,308
Proved properties 62,411 29,045
---------- ----------
Net capitalized costs 162,539 111,353
---------- ----------
TOTAL
Capitalized
Unproved properties 260,314 287,425
Proved properties 3,240,848 2,993,412
Plant facilities 17,600 16,063
---------- ----------
3,518,762 3,296,900
Accumulated depreciation, depletion and amortization 1,584,998 1,426,480
---------- ----------
Net capitalized costs $1,933,764 $1,870,420
---------- ----------
</TABLE>
57
<PAGE> 59
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
thousands 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
UNITED STATES -- Capitalized
Property acquisition
Exploration $ 9,723 $ 87,747 $ 15,637
Development 26,022 16,005 27,806
Exploration 76,056 115,486 84,457
Development 113,401 132,846 80,122
-------- -------- --------
225,202 352,084 208,022
-------- -------- --------
CANADA -- Capitalized
Property acquisition
Exploration -- 987 273
Development -- 2,122 --
Exploration -- 770 2,665
Development -- 2,866 2,561
-------- -------- --------
-- 6,745 5,499
-------- -------- --------
ALGERIA AND OVERSEAS -- Capitalized
Property acquisition
Exploration 18 -- --
Development 6,848 -- --
Exploration 44,675 37,713 32,898
Development 901 88 --
-------- -------- --------
52,442 37,801 32,898
-------- -------- --------
TOTAL -- Capitalized
Property acquisition
Exploration 9,741 88,734 15,910
Development 32,870 18,127 27,806
Exploration 120,731 153,969 120,020
Development 114,302 135,800 82,683
-------- -------- --------
$277,644 $396,630 $246,419
-------- -------- --------
</TABLE>
58
<PAGE> 60
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following schedule includes only the revenues from the production and
sale of gas, oil, condensate and NGLs. Results of operations from gas marketing
and gas gathering are excluded. The income tax expense is calculated by applying
the current statutory tax rates to the revenues after deducting costs, which
include depreciation, depletion and amortization allowances, after giving effect
to permanent differences. The results of operations exclude general office
overhead and interest expense attributable to oil and gas production.
RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
thousands 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
UNITED STATES
Net revenues from production
Gas sold to consolidated affiliates $221,341 $253,667 $250,907
Other sales of gas, oil and NGLs 191,902 204,698 212,696
-------- -------- --------
413,243 458,365 463,603
Production (lifting) costs 126,189 121,023 119,832
Depreciation, depletion and amortization* 153,648 161,308 154,450
-------- -------- --------
133,406 176,034 189,321
Income tax expense 46,041 61,983 66,928
-------- -------- --------
Results of operations 87,365 114,051 122,393
-------- -------- --------
*DD&A rate per net equivalent barrel $ 3.88 $ 4.01 $ 4.26
-------- -------- --------
CANADA
Other sales of gas, oil and NGLs -- 9,046 13,945
Production (lifting) costs -- 4,052 5,611
Depreciation, depletion and amortization* -- 2,763 6,110
-------- -------- --------
-- 2,231 2,224
Income tax expense -- 556 580
-------- -------- --------
Results of operations -- 1,675 1,644
-------- -------- --------
*DD&A rate per net equivalent barrel $ -- $ 3.35 $ 4.92
-------- -------- --------
TOTAL
Net revenues from production
Gas sold to consolidated affiliates 221,341 253,667 250,907
Other sales of gas, oil and NGLs 191,902 213,744 226,641
-------- -------- --------
413,243 467,411 477,548
Production (lifting) costs 126,189 125,075 125,443
Depreciation, depletion and amortization 153,648 164,071 160,560
-------- -------- --------
133,406 178,265 191,545
Income tax expense 46,041 62,539 67,508
-------- -------- --------
Results of operations $ 87,365 $115,726 $124,037
-------- -------- --------
</TABLE>
59
<PAGE> 61
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
OIL AND GAS RESERVES
The following table shows estimates prepared by the Company's engineers of
proved reserves and proved developed reserves, net of royalty interests, of
natural gas, crude oil, condensate and NGLs owned at year-end and changes in
proved reserves during the last three years. Volumes for natural gas are in
billions of cubic feet (Bcf) at a pressure base of 14.73 pounds per square inch
and volumes for oil, condensate and NGLs are in millions of barrels (MMBbls).
Total volumes are in millions of energy equivalent barrels (MMEEBs). For this
computation, one barrel is the equivalent of six thousand cubic feet. NGLs are
included with oil and condensate reserves and the associated shrinkage has been
deducted from the gas reserves.
Algerian reserves are shown in accordance with the PSA. The reserves
include estimated quantities allocated to Anadarko for recovery of costs and
Algerian taxes and Anadarko's net equity share after recovery of such costs.
Anadarko's reserves increased in 1995 primarily from exploration and
development drilling and improved recovery. At year-end 1995, the Company had
92.5 MMBbls of proved reserves in Algeria, including 48.5 MMBbls that were added
during 1995. Anadarko's reserves also increased in 1995 due to higher natural
gas and crude oil prices at year-end 1995 compared to year-end 1994.
The Company's reserves increased in 1994 primarily due to exploration and
development drilling and improved recovery. During 1994, Anadarko added 44
MMBbls of oil reserves in Algeria, based on successful exploration drilling,
preliminary development studies and the contractual rights granted under the
PSA.
The Company's reserve additions in 1993 came primarily from exploration and
development drilling and improved recovery. Reserve revisions for 1993 included
an increase of about 60 Bcf to reflect a portion of the effect of the Kansas
Corporation Commission order which increased production allowables in the
Hugoton Field. This was offset by a modest downward revision to prior estimates
of oil and condensate reserves due to weak oil prices at year-end 1993.
The Company emphasizes that the volumes of reserves shown below are
estimates which, by their nature, are subject to revision. The estimates are
made using all available geological and reservoir data as well as production
performance data. These estimates are reviewed annually and revised, either
upward or downward, as warranted by additional performance data.
60
<PAGE> 62
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
OIL AND GAS RESERVES -- (CONTINUED)
<TABLE>
<CAPTION>
NATURAL GAS OIL, CONDENSATE AND NGLS TOTAL
(BCF) (MMBBLS) (MMEEBS)
------------------------ ----------------------------------- -----------------------------------
U.S. CANADA TOTAL U.S. CANADA ALGERIA TOTAL U.S. CANADA ALGERIA TOTAL
----- ------ ----- ----- ------ ------- ----- ----- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROVED RESERVES
DECEMBER 31, 1992 1,690 36 1,726 77.0 3.3 -- 80.3 358.7 9.3 -- 368.0
Revisions of prior
estimates 59 -- 59 (11.5) 0.2 -- (11.3) (1.7) 0.1 -- (1.6)
Extensions,
discoveries and
other additions 220 6 226 8.6 -- -- 8.6 45.3 1.2 -- 46.5
Improved recovery 13 -- 13 7.3 0.6 -- 7.9 9.4 0.6 -- 10.0
Purchases in place 13 -- 13 3.5 -- -- 3.5 5.7 -- -- 5.7
Production (159) (3) (162) (9.8) (0.7) -- (10.5) (36.3) (1.2) -- (37.5)
----- --- ----- ----- ---- ----- ----- ----- ---- ---- -----
DECEMBER 31, 1993 1,836 39 1,875 75.1 3.4 -- 78.5 381.1 10.0 -- 391.1
Revisions of prior
estimates 134 -- 134 2.5 -- -- 2.5 24.9 -- -- 24.9
Extensions,
discoveries and
other additions 76 2 78 30.9 -- 44.0 74.9 43.5 0.4 44.0 87.9
Improved recovery 8 -- 8 14.8 -- -- 14.8 16.1 -- -- 16.1
Purchases in place 59 -- 59 4.4 0.4 -- 4.8 14.2 0.4 -- 14.6
Sales in place (26) (38) (64) (3.0) (3.4) -- (6.4) (7.2) (9.9) -- (17.1)
Production (173) (3) (176) (11.3) (0.4) -- (11.7) (40.2) (0.9) -- (41.1)
----- --- ----- ----- ---- ----- ----- ----- ---- ---- -----
DECEMBER 31, 1994 1,914 -- 1,914 113.4 -- 44.0 157.4 432.4 -- 44.0 476.4
Revisions of prior
estimates 29 -- 29 2.6 -- -- 2.6 7.5 -- -- 7.5
Extensions,
discoveries and
other additions 70 -- 70 7.6 -- 48.5 56.1 19.3 -- 48.5 67.8
Improved recovery 14 -- 14 14.0 -- -- 14.0 16.3 -- -- 16.3
Purchases in place 18 -- 18 6.9 -- -- 6.9 9.8 -- -- 9.8
Sales in place (30) -- (30) (6.8) -- -- (6.8) (11.9) -- -- (11.9)
Production (172) -- (172) (11.0) -- -- (11.0) (39.6) -- -- (39.6)
----- --- ----- ----- ---- ----- ----- ----- ---- ---- -----
DECEMBER 31, 1995 1,843 -- 1,843 126.7 -- 92.5 219.2 433.8 -- 92.5 526.3
----- --- ----- ----- ---- ----- ----- ----- ---- ---- -----
PROVED DEVELOPED
RESERVES
December 31, 1992 1,656 36 1,692 69.3 3.3 -- 72.6 345.3 9.3 -- 354.6
December 31, 1993 1,674 40 1,714 60.8 3.4 -- 64.2 339.8 10.0 -- 349.8
December 31, 1994 1,787 -- 1,787 74.2 -- -- 74.2 372.0 -- -- 372.0
December 31, 1995 1,737 -- 1,737 77.5 -- -- 77.5 367.0 -- -- 367.0
</TABLE>
61
<PAGE> 63
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
DISCOUNTED FUTURE NET CASH FLOWS
Estimates of future net cash flows from proved reserves of gas, oil,
condensate and NGLs were made in accordance with SFAS No. 69, "Disclosures about
Oil and Gas Producing Activities". The amounts were prepared by the Company's
engineers and are shown in the following table. The estimates are based on
prices at year-end.
Gas prices are escalated only for fixed and determinable amounts under
provisions in some contracts. Estimated future cash inflows are reduced by
estimated future development and production costs based on year-end cost levels,
assuming continuation of existing economic conditions, and by estimated future
income tax expense. Income tax expense, both U.S. and foreign, is calculated by
applying the existing statutory tax rates, including any known future changes,
to the pretax net cash flows giving effect to any permanent differences and
reduced by the applicable tax basis. The effect of tax credits are considered in
determining the income tax expense.
At December 31, 1995, the present value (discounted at ten percent) of
future net revenues from Anadarko's proved reserves, before income taxes, was
$2.56 billion (stated in accordance with the regulations of the Securities
Exchange Commission and the Financial Accounting Standards Board). The increase
of 27 percent in 1995 compared to 1994 is primarily due to the additions of
proved reserves related to successful drilling in Algeria and offshore in the
Gulf of Mexico as well as higher natural gas and crude oil prices at year-end
1995.
The present value of future net revenues does not purport to be an estimate
of the fair market value of Anadarko's proved reserves. An estimate of fair
value would also take into account, among other things, anticipated changes in
future prices and costs, the expected recovery of reserves in excess of proved
reserves and a discount factor more representative of the time value of money
and the risks inherent in producing oil and gas. Significant changes in
estimated reserve volumes or commodity prices could have a material effect on
the Company's consolidated financial statements.
62
<PAGE> 64
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES
<TABLE>
<CAPTION>
millions 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
UNITED STATES
Future cash inflows $5,621 $4,672 $4,700
Future production and development costs 1,847 1,534 1,530
------ ------ ------
Future net cash flows before income taxes 3,774 3,138 3,170
10% annual discount for estimated timing of cash flows 1,712 1,386 1,402
------ ------ ------
Discounted future net cash flows before income taxes 2,062 1,752 1,768
Future income taxes, net of 10% annual discount 613 518 544
------ ------ ------
Standardized measure of discounted future net cash flows
relating to oil and gas reserves 1,449 1,234 1,224
------ ------ ------
CANADA
Future cash inflows -- -- 102
Future production and development costs -- -- 28
------ ------ ------
Future net cash flows before income taxes -- -- 74
10% annual discount for estimated timing of cash flows -- -- 30
------ ------ ------
Discounted future net cash flows before income taxes -- -- 44
Future income taxes, net of 10% annual discount -- -- 14
------ ------ ------
Standardized measure of discounted future net cash flows
relating to oil and gas reserves -- -- 30
------ ------ ------
ALGERIA
Future cash inflows 1,907 835 --
Future production and development costs 572 323 --
------ ------ ------
Future net cash flows before income taxes 1,335 512 --
10% annual discount for estimated timing of cash flows 836 252 --
------ ------ ------
Discounted future net cash flows before income taxes 499 260 --
Future income taxes, net of 10% annual discount 214 102 --
------ ------ ------
Standardized measure of discounted future net cash flows
relating to oil and gas reserves 285 158 --
------ ------ ------
TOTAL
Future cash inflows 7,528 5,507 4,802
Future production and development costs 2,419 1,857 1,558
------ ------ ------
Future net cash flows before income taxes 5,109 3,650 3,244
10% annual discount for estimated timing of cash flows 2,548 1,638 1,432
------ ------ ------
Discounted future net cash flows before income taxes 2,561 2,012 1,812
Future income taxes, net of 10% annual discount 827 620 558
------ ------ ------
Standardized measure of discounted future net cash flows
relating to oil and gas reserves $1,734 $1,392 $1,254
------ ------ ------
</TABLE>
63
<PAGE> 65
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES
<TABLE>
<CAPTION>
millions 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
UNITED STATES
Beginning of year $1,234 $1,224 $1,273
Sales and transfers of oil and gas produced, net of
production costs (287) (337) (338)
Net changes in prices and development and production costs 293 (361) (186)
Extensions, discoveries, additions and improved recovery,
less related costs 191 226 286
Development costs incurred during the period 23 9 5
Revisions of previous quantity estimates 20 137 1
Purchases of minerals in place 42 25 25
Sales of minerals in place (60) (39) --
Accretion of discount 175 177 176
Net change in income taxes (95) 26 (54)
Other (87) 147 36
------ ------ ------
End of year 1,449 1,234 1,224
------ ------ ------
CANADA
Beginning of year -- 30 29
Sales and transfers of oil and gas produced, net of
production costs -- (5) (8)
Net changes in prices and development and production costs -- -- (4)
Extensions, discoveries, additions and improved recovery,
less related costs -- 1 7
Revisions of previous quantity estimates -- -- 1
Purchases of minerals in place -- 4 --
Sales of minerals in place -- (48) --
Accretion of discount -- 4 4
Net change in income taxes -- 14 (1)
Other -- -- 2
------ ------ ------
End of year $ -- $ -- $ 30
------ ------ ------
</TABLE>
64
<PAGE> 66
ANADARKO PETROLEUM CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(UNAUDITED)
CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES -- (CONTINUED)
<TABLE>
<CAPTION>
millions 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
ALGERIA
Beginning of year $ 158 $ -- $ --
Net changes in prices and development and production costs 98 -- --
Extensions, discoveries, additions and improved recovery,
less related costs 108 260 --
Development costs incurred during the period 5 -- --
Accretion of discount 26 -- --
Net change in income taxes (112) (102) --
Other 2 -- --
------ ------ ------
End of year 285 158 --
------ ------ ------
TOTAL
Beginning of year 1,392 1,254 1,302
Sales and transfers of oil and gas produced, net of
production costs (287) (342) (346)
Net changes in prices and development and production costs 391 (361) (190)
Extensions, discoveries, additions and improved recovery,
less related costs 299 487 293
Development costs incurred during the period 28 9 5
Revisions of previous quantity estimates 20 137 2
Purchases of minerals in place 42 29 25
Sales of minerals in place (60) (87)
Accretion of discount 201 181 180
Net change in income taxes (207) (62) (55)
Other (85) 147 38
------ ------ ------
End of year $1,734 $1,392 $1,254
------ ------ ------
</TABLE>
65
<PAGE> 67
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See "Election of Directors" in the Anadarko Petroleum Corporation Proxy
Statement, dated March 18, 1996 ("Proxy Statement"), which is incorporated
herein by reference.
See list of "Executive Officers of the Registrant" appearing under Item 4
of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Directors" and "Compensation and Benefits Committee
Report on Executive Compensation" in the Proxy Statement, which are incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Voting Securities and Principle Holders -- Security Ownership of
Management and Security Ownership of Certain Beneficial Owners" in the Proxy
Statement, which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Voting Securities and Principle Holders -- Transactions with
Management and Others" in the Proxy Statement, which is incorporated herein by
reference.
66
<PAGE> 68
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report or
incorporated by reference:
(1) The consolidated financial statements of Anadarko Petroleum
Corporation are listed on the Index to this report, page 32.
(2) Exhibits not incorporated by reference to a prior filing are
designated by an asterisk (*) and are filed herewith; all exhibits
not so designated are incorporated herein by reference to a prior
filing as indicated.
<TABLE>
<CAPTION>
EXHIBIT ORIGINALLY FILED FILE
NUMBER DESCRIPTION AS EXHIBIT NUMBER
------- ----------- ---------------- ------
<S> <C> <C> <C> <C>
3(a) Restated Certificate of Incorporation of 19(a)(i) to Form 10-Q 1-8968
Anadarko Petroleum Corporation, dated for quarter ended
August 28, 1986 September 30, 1986
(b) By-laws of Anadarko Petroleum 19(a)(ii) to Form 10-Q 1-8968
Corporation, as amended for quarter ended
September 30, 1986
4(a) Rights Agreement, dated as of October 4, 4 to Form 8-K dated 1-8968
1988, between Anadarko Petroleum October 5, 1988
Corporation and Manufacturers Hanover
Trust Company, Rights Agent
(b) Indenture, dated as of May 10, 1988, 4(a) to Form S-3 33-21094
between Anadarko Petroleum Corporation Registration Statement
and Continental Illinois National Bank
and Trust Company of Chicago, Trustee
(c) First Supplemental Indenture, dated as 4(d) to Form 10-K 1-8968
of November 15, 1991, between Anadarko for year ended
Petroleum Corporation and Continental December 31, 1991
Bank, National Association, Trustee
(d) Revolving Credit Agreement dated as of 4.1 to Form S-8 dated 1-8968
May 24, 1994 July 8, 1994
*(e) Amendment to Revolving Credit Agreement,
dated as of May 23, 1995
(f) Indenture, dated as of March 1, 1995, 4(a) to Form 10-Q for 1-8968
between Anadarko Petroleum Corporation the quarter ended June
and the Chase Manhattan Bank, N.A., 30, 1995
Trustee
(g) Distribution Agreement, dated as of 4(b) to Form 10-Q for 1-8968
March 9, 1995, for $300,000,000 the quarter ended June
Medium-Term Notes, Series A 30, 1995
10(a) (i) Tax Sharing Agreement, dated September 19(c)(i) to Form 10-Q 1-8968
30, 1986, among Panhandle Eastern for quarter ended
Corporation, Centana Energy Corporation September 30, 1986
and Anadarko Petroleum Corporation
(ii) Spin-Off Agreement, dated September 30, 10(a)(iii) to Form 10-K 1-8968
1986, between Panhandle Eastern for year ended December
Corporation and Anadarko Petroleum 31, 1988
Corporation
</TABLE>
67
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT ORIGINALLY FILED FILE
NUMBER DESCRIPTION AS EXHIBIT NUMBER
- --------------- ----------- ---------------- --------
<S> <C> <C> <C> <C>
10(a) (iii) Global Settlement Agreement between 28(a) to Form 10-Q 1-8968
Panhandle Eastern Corporation and for quarter ended
Anadarko Petroleum Corporation, dated March 31, 1989
March 31, 1989
10(b) (i) Director Deferred Compensation Plan of 10(b)(viii) to Form 10-K 1-8968
Anadarko Petroleum Corporation, for year ended December
effective January 1, 1987 31, 1986
(ii) Director Deferred Compensation Agreement 19(a)(i) to Form 10-Q 1-8968
between Anadarko Petroleum Corporation for quarter ended March
and each Director electing to 31, 1987
participate
(iii) Anadarko Petroleum Corporation Director 10(b)(ix) to Form 10-K 1-8968
Retirement Income Plan, effective for year ended December
October 1, 1986 31, 1986
(iv) Anadarko Petroleum Corporation 1988 19(b) to Form 10-Q 1-8968
Stock Option Plan for Non-Employee for quarter ended
Directors September 30, 1988
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
(v) Anadarko Petroleum Corporation and 19(c)(ix) to Form 10-Q 1-8968
Participating Affiliates and for quarter ended
Subsidiaries Annual Override Pool Bonus September 30, 1986
Plan, as amended October 6, 1986
(vi) Second Amendment to Anadarko Petroleum 10(b)(ii) to Form 10-K 1-8968
Corporation and Participating Affiliates for year ended December
and Subsidiaries Annual Override Pool 31, 1987
Bonus Plan
(vii) Anadarko Petroleum Corporation 1986 10(b)(vi) to Form 10-K 1-8968
Stock Option Plan, as amended October for year ended December
28, 1987 (and Related Agreement) 31, 1987
(viii) Restatement of the Anadarko Petroleum Post Effective Amendment 33-22134
Corporation 1987 Stock Option Plan (and No. 1 to Forms S-8 and
Related Agreement) S-3, Anadarko Petroleum
Corporation 1987 Stock
Option Plan
(ix) 1993 Stock Incentive Plan 10(b)(xii) to Form 10-K 1-8968
for year ended December
31, 1993
(x) Annual Incentive Bonus Plan 10(b)(xiii) to Form 10-K 1-8968
for year ended December
31, 1993
(xi) Agreement between Employee and Anadarko 28(c) to Form 10-Q 1-8968
Petroleum Corporation related to Change for quarter ended
in Control, Death or Disability, or September 30, 1987
Termination Without Cause
(xii) Anadarko Petroleum Corporation Key 19(c)(v) to Form 10-Q 1-8968
Employee Contract of Employment for quarter ended
September 30, 1986
</TABLE>
68
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT ORIGINALLY FILED FILE
NUMBER DESCRIPTION AS EXHIBIT NUMBER
- --------------- ----------- ---------------- --------
<S> <C> <C> <C> <C>
10(b) (xiii) Restatement of Key Employee Contract of 19(a) to Form 10-Q 1-8968
Employment for quarter ended
June 30, 1988
(xiv) Restatement of Key Employee Contract of 19(a) to Form 10-Q 1-8968
Employment Amended October 27, 1988 for quarter ended
September 30, 1988
(xv) Executive Deferred Compensation Plan of 10(b)(xii) to Form 10-K 1-8968
Anadarko Petroleum Corporation and for year ended December
Participating Subsidiaries and 31, 1987
Affiliates, effective October 1, 1986
(xvi) Executive Deferred Compensation Plan of 10(b)(vi) to Form 10-K 1-8968
Anadarko Petroleum Corporation, for year ended December
effective January 1, 1987 31, 1986
(xvii) Executive Deferred Compensation 19(a)(ii) to Form 10-Q 1-8968
Agreement between Anadarko Petroleum for quarter ended March
Corporation and each Executive electing 31, 1987
to participate
(xviii) Amendments to Executive Deferred 10(b)(xv) to Form 10-K 1-8968
Compensation Agreement between Anadarko for year ended December
Petroleum Corporation and each Executive 31, 1987
electing to participate
*(xix) Anadarko Retirement Restoration Plan,
effective January 1, 1995
*(xx) Anadarko Savings Restoration Plan,
effective January 1, 1995
*(xxi) Plan Agreement for the Management Life
Insurance Plan between Anadarko
Petroleum Corporation and each Eligible
Employee, effective July 1, 1995
10(c) (i) Purchase and Sale Agreement by and 10(c)(i) to Form 8-K 1-8968
between Atlantic Richfield Company, a dated January 13, 1993
Delaware Corporation, as Seller and
Anadarko Petroleum Corporation, a
Delaware corporation, as Purchaser,
dated December 8, 1992
*12 Computation of Ratios of Earnings to
Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock
Dividends
*13 Portions of the Anadarko Petroleum
Corporation 1995 Annual Report to
Stockholders
*21 List of Significant Subsidiaries:
Anadarko Gathering Company,
a Delaware corporation,
Anadarko Trading Company,
a Delaware corporation,
Anadarko Algeria Corporation,
a Delaware Corporation
</TABLE>
69
<PAGE> 71
<TABLE>
<CAPTION>
EXHIBIT ORIGINALLY FILED FILE
NUMBER DESCRIPTION AS EXHIBIT NUMBER
- --------------- ---------------------------------------- ------------------------ --------
<S> <C> <C> <C>
*23 Consents of Experts and Counsel
Consent of KPMG Peat Marwick LLP
*24 Powers of Attorney
*27 Financial Data Schedule
*99 Anadarko Petroleum Corporation Proxy
Statement, dated March 18, 1996
</TABLE>
- ---------------
The total amount of securities of the registrant authorized under any instrument
with respect to long-term debt not filed as an Exhibit does not exceed ten
percent of the total assets of the registrant and its subsidiaries on a
consolidated basis. The registrant agrees, upon request of the Securities and
Exchange Commission, to furnish copies of any or all of such instruments to the
Securities and Exchange Commission.
(b) REPORTS ON FORM 8-K
There were no reports filed on Form 8-K during the three months ended
December 31, 1995.
70
<PAGE> 72
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
ANADARKO PETROLEUM CORPORATION
<TABLE>
<S> <C>
March 7, 1996 By [MICHAEL E. ROSE]
----------------------------------------------
(Michael E. Rose, Senior Vice President,
Finance and Chief Financial Officer)
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED ON MARCH 7, 1996.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE
------------------ -----
<S> <C> <C>
(i) Principal executive officer:*
ROBERT J. ALLISON, JR. Chairman of the Board,
------------------------------------ President and Chief Executive Officer
(Robert J. Allison, Jr.)
(ii) Principal financial officer:*
MICHAEL E. ROSE Senior Vice President,
------------------------------------ Finance and Chief Financial Officer
(Michael E. Rose)
(iii) Principal accounting officer:*
JAMES R. LARSON Vice President and Controller
------------------------------------
(James R. Larson)
(iv) Directors:*
ROBERT J. ALLISON, JR.
CONRAD P. ALBERT
LARRY BARCUS
RONALD BROWN
JAMES L. BRYAN
JOHN R. GORDON
CHARLES M. SIMMONS
</TABLE>
- ---------------
*Signed on behalf of each of these persons and on his own behalf:
By [MICHAEL E. ROSE]
------------------------------------
(Michael E. Rose, Attorney-in-Fact)
71
<PAGE> 1
Page 1
EXHIBIT 4(E)
AMENDMENT TO REVOLVING CREDIT AGREEMENT
Amendment, dated as of May 23, 1995, among ANADARKO PETROLEUM
CORPORATION, a Delaware corporation (the "Company"), the Banks named on the
signature pages hereof (individually a "Bank" and collectively the "Banks") and
CHEMICAL BANK, as Agent for the Banks (the "Agent").
WHEREAS, the Company, the Banks and the Agent have entered
into a Revolving Credit Agreement, dated as of May 24, 1994 (the "Agreement"),
and desire to amend the Agreement in the manner and to the extent herein
provided.
NOW THEREFORE, the Company, each Bank and the Agent agree as
follows:
1. As used herein, the term "Amendment Date" shall mean
May 23, 1995 or such other date as the parties hereafter shall agree upon.
Unless otherwise specifically defined herein, each term used herein which is
defined in the Agreement shall have the meaning assigned such term in the
Agreement. Each reference to "hereof," "hereunder," "herein" and "hereby" and
each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Agreement shall from and after the
date hereof refer to the Agreement as amended hereby.
2. The Company, the Banks and the Agent agree that,
subject to the conditions set forth in Section 3 hereof, as of the date hereof
the definition of "Termination Date" in Section 1.01 of the Agreement shall be
amended by replacing the date "June 30, 1999" with the date "June 30, 2000".
3. The effectiveness of the amendment specified in
Section 2 hereof shall be subject to the conditions that, on or prior to the
Amendment Date, each Bank and the Agent shall have (i) duly executed and
delivered this Amendment and (ii) received the following:
(a) A certificate signed by a responsible officer
of the Company, dated the Amendment Date, to the effect that:
(i) the representations and warranties
contained in 3.01 of the Agreement are true and
accurate on and as of the Amendment Date as though
made on and as of such date (except to the extent
that such representations and warranties relate
solely to an earlier date);
(ii) no event has occurred and is
continuing, or would result from the execution,
delivery and performance of this Amendment, which
constitutes an Event of Default or would constitute
an Event of Default with the giving of notice or the
lapse of time, or both; and
(iii) the Company is in compliance with
all the terms, covenants and conditions of the
Agreement which are binding upon it.
(b) A favorable opinion of the General Counsel
of the Company, dated the
<PAGE> 2
Page 2
Amendment Date, to the effect that:
(i) the Company is duly incorporated,
validly existing and in good standing under the laws
of the State of Delaware and is qualified to do
business as a foreign corporation and is in good
standing in the States of Colorado, Kansas,
Louisiana, Montana, Nevada, New Mexico, Oklahoma,
Texas and Wyoming;
(ii) this Amendment has been duly
authorized, executed and delivered by the Company;
(iii) this Amendment, assuming due
authorization, execution and delivery hereof by the
Banks and the Agent, constitutes a valid and binding
agreement of the Company, enforceable in accordance
with its terms, except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally
and (y) rights of acceleration and the availability
of equitable remedies may be limited by equitable
principles of general applicability;
(iv) the execution, delivery and
performance by the Company of this Amendment will not
(x) conflict with the restated certificate of
incorporation or by- laws of the Company, each as in
effect on the date of such opinion, (y) contravene
any applicable provision of any applicable law or
applicable order or (z) conflict with any provision
of any indenture, loan agreement or other similar
agreement or instrument known to such counsel (having
made due inquiry with respect thereto) binding on the
Company or affecting its property;
(v) no authorization, consent or
approval of any governmental body or agency of the
State of Texas or the United States of America which
has not been obtained is required in connection with
the execution, delivery and performance by the
Company of this Amendment; and
(vi) to the knowledge of such counsel
(having made due inquiry with respect thereto), there
is no proceeding pending or threatened before any
court or administrative agency which, in the opinion
of such counsel, will result in a final determination
which would have the effect of preventing the Company
from carrying on its business or from meeting its
current and anticipated obligations on a timely
basis.
In rendering such opinion, the General Counsel of the Company shall opine only
as to matters governed by the Federal laws of the United States of America, the
laws of the State of Texas and the General Corporation Law of the State of
Delaware, such counsel may also state that he has relied on certificates of
state officials as to qualification to do business and good standing
certificates of officers of the Company and other sources believed by him to be
responsible.
4. Except as amended hereby, the Agreement shall
continue in full force and effect.
<PAGE> 3
Page 3
5. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
6. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This
Amendment shall become effective as of the date hereof when the Agent shall
have received duly executed counterparts hereof signed by the Company, the
Agent and each of the Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall have
received telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
ANADARKO PETROLEUM CORPORATION
By
---------------------------
Title: Treasurer
CHEMICAL BANK
By
---------------------------
Title
------------------------
THE CHASE MANHATTAN BANK, N.A.
By
---------------------------
Title
------------------------
THE BANK OF AMERICA, NT & SA
By
--------------------------
Title
-----------------------
<PAGE> 4
Page 4
MELLON BANK, N.A.
By
---------------------------
Title
------------------------
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By
---------------------------
Title
------------------------
THE BANK OF NEW YORK
By
---------------------------
Title
------------------------
CREDIT SUISSE
By
---------------------------
Title
------------------------
NATIONSBANK OF TEXAS, N.A.
By
---------------------------
Title
------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By
---------------------------
Title
------------------------
<PAGE> 5
Page 5
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By
---------------------------
Title
------------------------
BANK OF MONTREAL
By
---------------------------
Title
------------------------
ABN AMRO BANK N.V.
By
---------------------------
Title
------------------------
CHEMICAL BANK, as Agent
By
---------------------------
Title
------------------------
<PAGE> 1
EXHIBIT 10(b)xix
ANADARKO RETIREMENT RESTORATION PLAN
Effective Date: January 1, 1995
<PAGE> 2
Page 1
ANADARKO RETIREMENT RESTORATION PLAN
WITNESSETH:
WHEREAS, Anadarko Petroleum Corporation (the "Company") has heretofore
adopted the Anadarko Retirement Plan (the "Retirement Plan") for the benefit of
its eligible employees; and
WHEREAS, the Company has heretofore adopted the Anadarko Petroleum
Corporation Executive Benefit Equalization Plan (the "Equalization Plan") to
provide for the payment of certain pension and pension related benefits to
certain of its employees who are members of the Retirement Plan so that the
total defined benefits of such employees can be determined without regard to
certain statutory limitations; and
WHEREAS, the Company desires to replace and restate the portion of the
Equalization Plan pertaining to the Retirement Plan in order to provide a
separate program of supplemental benefits to the Retirement Plan, without gap
or interruption and to amend such program of benefits in certain respects;
NOW, THEREFORE, the Equalization Plan is hereby superseded and
replaced with respect to benefits intended thereunder to supplement the
Retirement Plan by this Anadarko Retirement Restoration Plan (the "Plan"),
effective as of January 1, 1995:
<PAGE> 3
Page 2
I.
DEFINITIONS AND CONSTRUCTION
1.01 INCORPORATION OF THE RETIREMENT PLAN
The Retirement Plan, as it now exists and as it may be amended from
time to time, is hereby incorporated by reference into and shall form a part of
the Plan as fully as if set forth herein verbatim. The Retirement Plan,
whenever referred to in the Plan, shall mean the Retirement Plan, as amended,
as it exists as of the date any determination is made of benefits payable under
the Plan. All capitalized terms used in the Plan shall have the meanings
assigned to them under the provisions of the Retirement Plan unless otherwise
defined herein or qualified by the context.
1.02 DEFINITIONS. Where the following words and phrases appear in
this Plan, they shall have the respective meanings set forth below, unless
their context clearly indicates to the contrary.
ACT: The Employee Retirement Income Security Act of 1974, as amended.
CODE: The Internal Revenue Code of 1986, as amended.
COMMITTEE: The Administrative Committee appointed by the Directors to
administer the Plan.
COMPANY: Anadarko Petroleum Corporation and each other Employing
Company.
DIRECTORS: The Board of Directors of Anadarko Petroleum Corporation
or the Compensation and Benefits Committee of the Board of Directors.
EMPLOYING COMPANY: Any entity which has adopted the Plan.
LIMITATIONS: The aggregate of the limitations imposed under Section
401(a)(17) and Section 415 of the Code plus any amounts deferred as
the result of an election by an Employee to defer compensation
pursuant to a Company deferred compensation plan.
PARTICIPANT: Any RRP Eligible Employee who has been designated by the
Committee to participate in the Plan.
PLAN YEAR: The twelve consecutive month period commencing upon
January 1 of each year.
RRP: The Anadarko Retirement Restoration Plan.
<PAGE> 4
Page 3
RRP ELIGIBLE EMPLOYEE: Any Employee who is currently participating in
the Retirement Plan and whose benefits are reduced by limitations in
the Code or whose taxable compensation has been reduced as a result of
an election by the Employee to defer compensation pursuant to a
Company deferred compensation plan.
1.03 NUMBER AND GENDER. Whenever appropriate herein, words used in
the singular shall be considered to include the plural and the plural to
include the singular. The masculine gender, where appearing in this Plan,
shall be deemed to include the feminine gender.
1.04 HEADINGS. The headings of Articles and Sections herein are
included solely for convenience and if there is any conflict between such
headings and the text of the Plan, the text shall control.
1.05 CONSTRUCTION. It is intended that the Plan be an unfunded plan
which is not intended to meet the qualification requirements of section 401 of
the Code, and provide benefits to Participants after the Code limits are
exceeded in the qualified plan and all provisions herein shall be constructed
in accordance with such intent.
II.
PURPOSE OF THE PLAN
The Company intends and desires to recognize the value to the Company
of the past and present services of Employees in the Plan and to encourage and
assure their continued service with the Company by making more adequate
provision for their future retirement security. The Plan is made necessary by
certain limitations which are imposed on the Retirement Plan by the Code, and
the regulations promulgated thereunder. The Plan is intended to constitute an
unfunded "deferred compensation plan" for a select group of management or
highly compensated employees within the meaning of sections 201(2), 301(a)(3)
and 401(a)(1) of the Act.
III.
ADMINISTRATION
The Committee shall have full power and authority to interpret,
construe and administer the Plan and the Committee's interpretations and
construction hereof, and actions hereunder, including the determination of the
timing, form, amount of receipt of
<PAGE> 5
Page 4
any payment to be made hereunder, shall be binding and conclusive on all
persons for all purposes. No member of the Committee shall be liable to any
person for any action taken or omitted in connection with the interpretation
and administration of the Plan unless attributable to his own willful
misconduct or lack of good faith.
IV.
ELIGIBILITY
At any time and from time to time, the Committee, in its sole
discretion, shall designate the individuals who are Participants and the
effective date and other terms and conditions of participation; provided,
however, an individual may be a Participant only if the Committee determines
that such individual is one of a select group of management or highly
compensated employees of the Company.
V.
AMOUNT OF BENEFIT
The benefit payable to a Participant in the Plan, or his beneficiary
or beneficiaries, shall be paid at the time and in the manner described in
Article VI hereof based upon an amount equal to the Actuarial Equivalent of the
excess, if any of (a) over (b) where:
(a) is the benefit that would have been payable to such employee
or on his behalf to his beneficiary or beneficiaries under the
Retirement Plan if the provisions of the Retirement Plan were
administered without regard to the Limitations; and
(b) is the benefit, if any, that is in fact payable to such
employee or on his behalf to his beneficiary or beneficiaries
under the Retirement Plan.
Benefits determined under this Article shall be computed in accordance
with the foregoing and with the objective that such recipient should receive
under the Plan and the Retirement Plan that total amount which would have been
payable to that recipient solely under the Retirement Plan without regard to
the Limitations.
In no event shall an employee who is not entitled to benefits under
the Retirement Plan be eligible for a benefit under this Article.
<PAGE> 6
Page 5
VI.
PAYMENT OF BENEFITS
The benefits payable under Article V hereof for any reason shall be
payable in the same form and at the same time or times as the limited benefits
are payable to the Participant, or following his death, on his behalf to his
beneficiary or beneficiaries under the Retirement Plan and shall cease to any
recipient at the same time as benefits payable to such recipient under the
Retirement Plan shall cease. Notwithstanding the foregoing, however, the
Committee may, in its sole discretion, direct that the benefits payable under
Article V hereof be actuarially adjusted and paid in a form which they may in
their sole discretion elect.
VII.
CHANGE OF CONTROL
Upon a Change of Control, as defined in the Retirement Plan, other
provisions of the Plan to the contrary notwithstanding, on or before the date
which is 30 days after the occurrence of a Change of Control and the
Participant's termination of employment (as defined in Section X of the
Retirement Plan), the Company shall pay to each terminated Plan participant (or
to such participant's beneficiary or beneficiaries, if applicable) a single,
lump sum cash payment in an amount equal to the Actuarial Equivalent present
value of such participant's accrued benefit under the Plan as of the date of
such Change of Control. The preceding sentence shall also apply to a
participant's remaining accrued benefit if such benefit is in pay status as of
the date of such Change of Control. If any payment provided for in this
paragraph is not made on or before the expiration of the 30-day period
hereinabove described, interest shall accrue on the amount payable at the rate
of the prime interest rate plus 5% as published in the Wall Street Journal for
the date the Change of Control occurred from the date of such Change of
Control.
VIII.
PARTICIPANT'S RIGHTS
Benefits payable under the Plan shall be a general, unsecured
obligation of the Company to be paid by the Company from its own funds, and
such payments shall not (a) impose any obligation upon the Trust Fund under the
Retirement Plan; (b) be paid from the Trust Fund under the Retirement Plan; or
(c) have any effect whatsoever upon the Retirement Plan or the payment of
benefits from the Trust Fund under the Retirement
<PAGE> 7
Page 6
Plan. No Participant participating in the Plan or his beneficiary or
beneficiaries shall have any title to or beneficial ownership in any assets
which the Company may earmark to pay benefits hereunder.
IX.
AMENDMENT AND DISCONTINUANCE
The Plan may be amended from time to time, or terminated and
discontinued at any time, in each case at the sole discretion of the Committee;
provided, however, that (a) no amendment shall be made, nor shall the Plan be
terminated in a manner, which would reduce the benefits or rights to benefits
of any individual accrued under the Plan (determined on the basis of each
participant's presumed termination of employment as of the date of such
amendment or termination) prior to the later of the adoption or the effective
date of such amendment or termination, and (b) upon the occurrence of a Change
of Control, the Board may not amend the Plan in a manner which would reduce the
benefits provided to Participants immediately prior to such Change of Control.
X.
RESTRICTIONS ON ASSIGNMENT
Except upon receipt of a valid, executed Court Order, the interest of
a Participant participating in the Plan or his beneficiary or beneficiaries
hereunder may not be sold, transferred, assigned, or encumbered in any manner,
either voluntarily or involuntarily, and any attempt so to anticipate,
alienate, sell, transfer, assign, ledge, encumber, or charge the same shall be
null and void; neither shall the benefits hereunder be liable for or subject to
the debts, contracts, liabilities, engagements, or torts of any person to whom
such benefits or funds are payable, nor shall they be subject to garnishment,
attachment, or other legal or equitable process nor shall they be an asset in
bankruptcy. Notwithstanding the foregoing, no payments will be made from this
Plan until payments are made under the Retirement Plan.
<PAGE> 8
Page 7
XI.
NATURE OF PLAN
Any and all amounts set aside by the Company to discharge its
obligations hereunder shall remain subject to the claims of the general
creditors of the Company, present and future, and no payment shall be made
under the Plan unless the Company is then solvent. This provision shall not
require the Company to set aside any funds, but the Company may set aside such
funds if it chooses to do so. The Company intends that the Plan be unfunded
for the purpose of Title I of the Act.
XII.
CONTINUED EMPLOYMENT
Nothing contained herein shall be construed as conferring upon any
employee the right to continue in the employ of the Company in any capacity, or
affect in any way the right of the Company to terminate his employment at any
time.
XIII.
BINDING ON COMPANY, PARTICIPANTS AND THEIR SUCCESSORS
The Plan shall be binding upon and inure to the benefit of the
Company, its successors and assigns, and the participants and their respective
heirs, executors, administrators and legal representatives.
XIV.
LAWS GOVERNING
The Plan shall be construed in accordance with and governed by the
laws of the State of Texas.
<PAGE> 9
Page 8
EXECUTED as of January 1, 1995.
ANADARKO PETROLEUM CORPORATION
________________________________________
<PAGE> 1
EXHIBIT 10(b)xx
ANADARKO SAVINGS RESTORATION PLAN
Effective Date: January 1, 1995
<PAGE> 2
Page 1
ANADARKO SAVINGS RESTORATION PLAN
WITNESSETH:
WHEREAS, Anadarko Petroleum Corporation (the "Company") has heretofore
adopted the Anadarko Employee Savings Plan (the "Savings Plan") for the benefit
of its eligible employees; and
WHEREAS, the Company has heretofore adopted the Anadarko Petroleum
Corporation Executive Benefit Equalization Plan (the "Equalization Plan") to
provide for the payment of certain pension and pension related benefits to
certain of its employees who are members of the Savings Plan so that the total
defined contribution benefits of such employees can be determined without
regard to certain statutory limitations; and
WHEREAS, the Company desires to replace and restate the portion of the
Equalization Plan pertaining to the Savings Plan in order to provide a separate
program of supplemental benefits to the Savings Plan, without gap or
interruption and to amend such program of benefits in certain respects;
NOW, THEREFORE, the Equalization Plan is hereby superseded and
replaced with respect to benefits intended thereunder to supplement the Savings
Plan by this Anadarko Savings Restoration Plan (the "Plan"), effective as of
January 1, 1995:
<PAGE> 3
Page 2
I.
DEFINITIONS AND CONSTRUCTION
1.01 INCORPORATION OF THE SAVINGS PLAN
The Savings Plan, as it now exists and as it may be amended from time
to time is hereby incorporated by reference into and shall form a part of the
Plan as fully as if set forth herein verbatim. The Savings Plan, whenever
referred to in the Plan, shall mean the Savings Plan, as amended, as it exists
as of the date any determination is made of benefits payable under the Plan.
All capitalized terms used in the Plan shall have the meanings assigned to them
under the provisions of the Savings Plan unless otherwise defined herein or
qualified by the context.
1.02 DEFINITIONS. Where the following words and phrases appear in
this Plan, they shall have the respective meanings set forth below, unless
their context clearly indicates to the contrary.
ACT: The Employee Retirement Income Security Act of 1974, as amended.
CODE: The Internal Revenue Code of 1986, as amended.
COMMITTEE: The Administrative Committee appointed by the Directors to
administer the Plan.
COMPANY: Anadarko Petroleum Corporation and each other Employing
Company.
COMPANY STOCK: The common stock of Anadarko Petroleum Corporation.
CONTRIBUTION RATE: The combined before-tax and after-tax contribution
rate that a Participant has elected in the Savings Plan.
DIRECTORS: The Board of Directors of Anadarko Petroleum Corporation
or the Compensation and Benefits Committee of the Board of Directors.
EMPLOYING COMPANY: Any entity which has adopted the Plan.
PARTICIPANT: Any SRP Eligible Employee who has been designated by the
Committee to participate in the Plan.
PLAN YEAR: The twelve consecutive month period commencing upon
January 1 of each year.
<PAGE> 4
Page 3
RESTORATION ACCOUNT: A memorandum bookkeeping account established by
the Committee for each Participant.
SRP ELIGIBLE EMPLOYEE: Any Employee who is currently participating in
the Savings Plan and whose benefits are reduced by limitations in the
Code.
1.03 NUMBER AND GENDER. Whenever appropriate herein, words used in
the singular shall be considered to include the plural and the plural to
include the singular. The masculine gender, where appearing in this Plan,
shall be deemed to include the feminine gender.
1.04 HEADINGS. The headings of Articles and Sections herein are
included solely for convenience and if there is any conflict between such
headings and the text of the Plan, the text shall control.
1.05 CONSTRUCTION. It is intended that the Plan be an unfunded plan
which is not intended to meet the qualification requirements of section 401 of
the Code, and provide benefits to Participants after the Code limits are
exceeded in the qualified plan and all provisions herein shall be constructed
in accordance with such intent.
II.
PURPOSE OF THE PLAN
The Company intends and desires to recognize the value to the Company
of the past and present services of Employees in the Plan and to encourage and
assure their continued service with the Company by making more adequate
provision for their future retirement security. The Plan is made necessary by
certain limitations which are imposed on the Savings Plan by the Code, and the
regulations promulgated thereunder. The Plan is intended to constitute an
unfunded "deferred compensation plan" for a select group of management or
highly compensated employees within the meaning of sections 201(2), 301(a)(3)
and 401(a)(1) of the Act.
III.
ADMINISTRATION
The Committee shall have full power and authority to interpret,
construe and administer the Plan and the Committee's interpretations and
construction hereof, and
<PAGE> 5
Page 4
actions hereunder, including the determination of the timing, form, amount of
receipt of any payment to be made hereunder, shall be binding and conclusive on
all persons for all purposes. No member of the Committee shall be liable to
any person for any action taken or omitted in connection with the
interpretation and administration of the Plan unless attributable to his own
willful misconduct or lack of good faith.
IV.
ELIGIBILITY
At any time and from time to time, the Committee, in its sole
discretion, shall designate the individuals who are Participants and the
effective date and other terms and conditions of participation; provided,
however, an individual may be a Participant only if (a) such person is
participating in the Savings Plan and his benefits in the Savings Plan are
limited by the Code; and (b) the Committee determines that such individual is
one of a select group of management or highly compensated employees of the
Company.
V.
AMOUNT OF BENEFIT
Each Plan Year, the Committee shall credit to a Participant's
Restoration Account an amount equal to the excess, if any, of (a) over (b)
where:
(a) equals the Company Matching Contributions which would have
been allocated to such Plan participants' Company Contribution
Account under the Savings Plan if the Savings Plan had been
administered without regard to the limitations contained in
any of Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415
of the Code; and
(b) is the amount of Company Matching Contributions which were in
fact allocated for such Plan Year to the Company Contribution
Account of such Plan participant under the Savings Plan.
In determining the amount to be credited to a Participant's
Restoration Account for any Plan Year, the following rules shall be applicable:
(a) a Participant will only be entitled to allocations to his
Restoration Account if he was making contributions to the
Savings Plan for such year; and
<PAGE> 6
Page 5
(b) a Participant's Contribution Rate at the time the Savings Plan
limitations are reached shall be the rate the Plan utilizes to
determine the Participant's benefit in the Plan.
VI.
CREDITING OF INCOME EQUIVALENTS
As of the last day of each Plan Year (or more frequently as determined
by the Committee), Participants' Restoration Accounts shall be adjusted by
crediting or debiting such accounts based upon their deemed investment in such
investments as the Committee may, in its sole discretion, determine for such
Plan Year. The types of investments which may be determined by the Committee
for the deemed investment of Participants' Restoration Accounts shall include
but not be limited to:
(a) shares of Company stock;
(b) certificates of deposit, United States Treasury instrument or
other investments paying interest; and
(c) mutual funds or identified securities.
The Committee shall establish rules and procedures regarding the
determination of deemed investments of Participants' Restoration Accounts and
the resulting crediting or debiting adjustments of such accounts that are
uniformly applied with respect to the Restoration Accounts of all Participants.
The Committee may determine different deemed investments for Participants'
Restoration Accounts and may change the deemed investments for Participants'
Restoration Accounts from time to time.
VII.
FORFEITURES
If a Participant's employment is terminated for any reason other than
total and permanent disability or death before they become vested in the
Savings Plan, any benefits accrued in the Plan are forfeited. If a
Participant's employment is terminated due to total and permanent disability or
death, they are considered to be 100% vested in the Savings Plan and therefore
vested in any Plan benefits.
<PAGE> 7
Page 6
VIII.
PAYMENT OF BENEFITS
The benefits payable under Articles V and VI hereof shall be payable
in the form of a lump sum paid as soon as it is administratively practicable
based on the month end valuation date on or following termination, retirement,
disability or death. Notwithstanding the foregoing, however, the Committee
may, in its sole discretion, direct payment of the benefits payable under
Articles V and VI hereof for any reason to a Participant or Participant's
beneficiary or beneficiaries in an alternate form or time of payment.
IX.
CHANGE OF CONTROL
Upon a Change of Control (as defined in the Savings Plan), the
following events shall occur:
(a) all Participants shall be deemed to be vested in the Plan;
(b) Participants who terminate employment for any reason within
one year of a Change of Control shall be paid the higher of
(1) the value of their Restoration Account on the date of the
Change of Control, or (2) the value of their Restoration
Account at the month end on or after termination;
(c) Participants who terminate employment for any reason later
than one year after a Change of Control shall be paid the
value of their Restoration Account at the month end on or
after termination; and
(d) if the Plan is terminated within one year of a Change of
Control, pursuant to Article XII, participants shall be paid
the higher of (1) the value of their Restoration Account on
the date of the Change of Control, or (2) the value of their
Restoration Account at the month end on or after the Plan is
terminated.
<PAGE> 8
Page 7
X.
BENEFICIARIES
A Participant shall not have the right to designate a beneficiary
under the Plan. The recipients of any benefits payable under the Plan in the
event of such Participant's death shall be the same individuals who are the
recipients of his benefits payable under the Savings Plan on account of such
Participant's death.
XI.
PARTICIPANT'S RIGHTS
Benefits payable under the Plan shall be a general, unsecured
obligation of the Company to be paid by the Company from its own funds, and
such payments shall not (a) impose any obligation upon the Trust Fund under the
Savings Plan; (b) be paid from the Trust Fund under the Savings Plan; or (c)
have any effect whatsoever upon the Savings Plan or the payment of benefits
from the Trust Fund under the Savings Plan. No Participant participating in
the Plan or his beneficiary or beneficiaries shall have any title to or
beneficial ownership in any assets which the Company may earmark to pay
benefits hereunder.
XII.
AMENDMENT AND DISCONTINUANCE
The Plan may be amended from time to time, or terminated and
discontinued at any time, in each case at the sole discretion of the Committee;
provided, however, that (a) no amendment shall be made, nor shall the Plan be
terminated in a manner, which would reduce the benefits or rights to benefits
of any individual accrued under the Plan (determined on the basis of each
participant's presumed termination of employment as of the date of such
amendment or termination) prior to the later of the adoption or the effective
date of such amendment or termination, and (b) upon the occurrence of a Change
of Control, the Board may not amend the Plan in a manner which would reduce the
benefits provided to Participants immediately prior to such Change of Control.
<PAGE> 9
Page 8
XIII.
RESTRICTIONS ON ASSIGNMENT
The interest of a Participant participating in the Plan or his
beneficiary or beneficiaries hereunder may not be sold, transferred, assigned,
or encumbered in any manner, either voluntarily or involuntarily, and any
attempt so to anticipate, alienate, sell, transfer, assign, ledge, encumber, or
charge the same shall be null and void; neither shall the benefits hereunder be
liable for or subject to the debts, contracts, liabilities, engagements, or
torts of any person to whom such benefits or funds are payable, nor shall they
be subject to garnishment, attachment, or other legal or equitable process nor
shall they be an asset in bankruptcy.
XIV.
NATURE OF PLAN
Any and all amounts set aside by the Company to discharge its
obligations hereunder shall remain subject to the claims of the general
creditors of the Company, present and future, and no payment shall be made
under the Plan unless the Company is then solvent. This provision shall not
require the Company to set aside any funds, but the Company may set aside such
funds if it chooses to do so. The Company intends that the Plan be unfunded
for the purpose of Title I of the Act.
XV.
CONTINUED EMPLOYMENT
Nothing contained herein shall be construed as conferring upon any
employee the right to continue in the employ of the Company in any capacity, or
affect in any way the right of the Company to terminate his employment at any
time.
<PAGE> 10
Page 9
XVI.
BINDING ON COMPANY, PARTICIPANTS AND THEIR SUCCESSORS
The Plan shall be binding upon and inure to the benefit of the
Company, its successors and assigns, and the participants and their respective
heirs, executors, administrators and legal representatives.
XVII.
LAWS GOVERNING
The Plan shall be construed in accordance with and governed by the
laws of the State of Texas.
<PAGE> 11
Page 10
EXECUTED as of January 1, 1995.
ANADARKO PETROLEUM CORPORATION
________________________________________
<PAGE> 1
Page 1
EXHIBIT 10(b)xxi
PLAN AGREEMENT
FOR
MANAGEMENT LIFE INSURANCE PLAN
This Plan Agreement for the Management Life Insurance Plan ("Agreement")
is made as of July 1, 1995, by and between Anadarko Petroleum Corporation, a
Delaware corporation (the "Corporation"), and _______________(the "Employee").
RECITALS
A. The Employee desires to insure his or her life for the
benefit and protection of his or her family under the Policy (as defined
below);
B. The Corporation desires to help the Employee provide
insurance for the benefit and protection of his or her family by providing
funds from time to time to pay the premiums due on the Policy; and
C. The Employee, as owner of the Policy, desires to assign
certain interests in the Policy to the Corporation, to the extent provided
herein, as security for repayment of certain funds provided by the Corporation
for the acquisition and/or maintenance of the Policy.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Agreement agree
as follows:
1. Definitions. For purposes of this Agreement, unless
otherwise clearly apparent from the context, the following phrases or terms
shall have the following indicated meanings:
(a) "Aggregate Premiums Paid" shall mean, at any time, an
amount equal to (i) the cumulative premiums paid by the Corporation under
the Policy, less (ii) the amount of any policy dividends or interest
thereon paid in cash to the Corporation or used by the Corporation to
make premium payments, less (iii) any policy loans to the Corporation and
accrued interest thereon at such time. Despite the foregoing, Aggregate
Premiums Paid shall not include extra benefit riders or agreements, other
than those providing additional life insurance coverage on the insured.
<PAGE> 2
Page 2
(b) "Base Annual Salary" shall mean the base annual
compensation, excluding bonuses, commissions, overtime, relocation
expenses, incentive payments, non-monetary awards, directors fees and
other fees, paid to the Employee for employment services rendered to the
Corporation, before reduction for compensation deferred pursuant to all
qualified, non-qualified and Code Section 125 plans of the Corporation.
For purposes of determining the Employee's Base Annual Salary as of a
particular Measurement Date, the Employee's Base Annual Salary as of the
most recent preceding July 1 will be used (which means that the
Employee's Base Annual Salary will be changed under this Agreement only
once a year to reflect the actual increase or decrease in the Employee's
actual base salary during the year preceding the applicable July 1).
(c) "Cash Surrender Value" shall mean an amount that
equals, at any specified time, the cash surrender value provided under
the Policy at that time.
(d) "Change of Control Event" shall mean the Employee's
termination of employment with the Corporation following a "Change of
Control," as such term is defined in either the Company's (i) Key
Employee Change of Control Contract or (ii) Change in Control Severance
Pay Plan. The applicable definition of "Change of Control" will be based
on the plan that the terminating Employee participates in, and if the
Employee participates in both plans, the definition that is most
favorable to the Employee, in terms of allowing the Employee to receive a
more favorable benefit under this Agreement, shall be the applicable
definition. Despite the foregoing, a Change of Control Event shall not
occur with respect to the Employee unless at the time of a Change of
Control, the Employee was eligible for a benefit under either the Key
Employee Change of Control Contract or the Change in Control Severance
Pay Plan.
(e) "Collateral Assignment Agreement" shall mean an
assignment made by the Employee in favor of the Corporation in a form
mutually agreed to by the Corporation and the Employee and accepted by
the Insurer.
(f) "Collateral Interest" shall mean the Corporation's interests
in the Policy, as set forth in Section 6 below.
(g) "Employee's Death Benefit" shall mean an amount that is
equal to (i) the Employee's Base Annual Salary, determined as of the date
of his or her death, multiplied by four, less (ii) $50,000.00.
(h) "Insurer" shall mean Security Life of Denver, Sun Life
of Canada and/or such other carrier(s) as the Corporation, in its sole
discretion, may select for purposes of providing insurance under this
Plan
<PAGE> 3
Page 3
(i) "Measurement Date" shall mean the earlier of:
(i) The Employee's Termination of Employment;
(ii) The termination of this Agreement in
accordance with Section 9 below;
(iii) The occurrence of a Change of Control Event;
(iv) The Employee's Retirement; or
(v) The Employee's death.
(j) "Disability" shall mean (i) a period of disability
during which the Employee qualifies for benefits under a disability plan
sponsored by the Corporation, (ii) if the Employee does not participate
in such a plan, a period of disability during which the Employee would
have qualified for benefits under such a plan had the Employee been a
participant in such a plan, or (iii) if the Corporation no longer
sponsors a long-term disability plan, a permanent disability as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(k) "Policy" shall mean the following policy or policies on
the life of the Employee that is issued by the Insurer:
Policy Number Insurer Type of policy
------------- ------- --------------
_____________ Sun Life of Canada Universal Life
_____________ Security Life of Denver Universal Life
(l) "Required Cash Surrender Value" shall mean, at the time
of a specified Measurement Date, the minimum amount of cash surrender
value that is needed in the Policy to support a death benefit that is
equal to one multiplied by the Employee's Base Annual Salary, determined
at the time of the specified Measurement Date, assuming that the Policy
will be held without surrender or loan until the Employee reaches age 90
and that the fixed interest rate to be used to project earnings on the
Policy up to the specified age is the Insurer's announced interest rate
under the Policy at the time of the specified Measurement Date. Despite
the foregoing, if a Change of Control Event occurs with respect to the
Employee, the Base Annual Salary that is used to calculate the Required
Cash Surrender Value shall be the higher of the Employee's Base Annual
Salary at the time of his or her Termination of Employment or at the time
of the Change of Control Event.
<PAGE> 4
Page 4
(m) "Retirement" shall mean retirement (whether early,
normal or late) as defined under the Corporation's qualified retirement
plan, as that plan may be amended from time to time.
(n) "Tax Limitation Date" shall mean the date on which the
Policy will no longer be subject to those provisions of Section
7702(f)(7) and Section 7702A of the Internal Revenue Code of 1986, as
amended (the "Code"), that would cause any loan, distribution or
surrender from or under the Policy to be taxed under those Sections or
Section 72 of the Code.
(o) "Termination of Employment" shall mean the ceasing of
employment with the Company for any reason other than Retirement,
Disability, death, an authorized leave of absence or a Change of Control
Event.
(p) "Term of this Agreement" shall mean the completion of
all performances required by the Employee and the Corporation under this
Agreement.
2. Acquisition of Policy; Ownership of Insurance. The parties
to this Agreement shall cooperate in applying for and obtaining the Policy.
The Policy shall be issued to the Employee as the sole and exclusive owner of
the Policy, subject to a collateral assignment in favor of the Corporation, as
provided in this Agreement and the Collateral Assignment Agreement.
3. Premium Payments on Policy.
(a) During the Term of this Agreement, the Corporation
shall pay to the Insurer, on or before each applicable premium due date,
all applicable premiums for the Policy. In the event that the
Corporation fails to make any such payment, the Employee may make (but is
not required to make) any such payment, and the Corporation shall
immediately pay to the Employee any amount so paid. All such premium
payments made by the Corporation under this Agreement shall constitute
advances by the Corporation to the Employee for which the Employee shall
be responsible, to the extent of the Corporation's Collateral Interest,
for repayment in accordance with the terms of this Agreement.
(b) All dividends declared or distributions made on the
Policy, if any, shall be applied to buy additional paid-up insurance.
<PAGE> 5
Page 5
4. Corporation's Rights. The Corporation's interests in and to
the Policy shall be specifically limited to (i) the right to be paid the
Collateral Interest upon the occurrence of the Measurement Date in accordance
with Section 6 below, and (ii) the right to obtain one or more loans or
advances on the Policy, either from the Insurer or, at any time, from other
persons, and to pledge or assign the Policy as security for such loans or
advances; provided, however, that such loans or pledges shall not in the
aggregate exceed the Aggregate Premiums Paid by the Corporation at any
specified date without the written consent of the Employee. With respect to
(ii) above, the sole signature of a duly authorized representative of the
Corporation shall be sufficient for the exercise of the Corporation's right to
borrow from the Policy or to pledge the Policy.
5. Employee's Rights.
(a) The Employee shall remain the owner of the Policy.
Except as otherwise provided in this Agreement (including Section 5(b)
below) and the Collateral Assignment Agreement, all rights in the Policy,
including, without limitation, the right to name or change the
beneficiary, shall remain exercisable by the Employee or his or her
permitted transferee. The rights granted to the Corporation by this
Agreement and the Collateral Assignment Agreement are intended to be no
greater than are necessary to secure the Corporation's Collateral
Interest, either from the Cash Surrender Value of the Policy during the
Employee's lifetime, or from the Policy's death proceeds upon the
Employee's death.
(b) Except as otherwise provided in this Agreement, without
the prior written consent of the Corporation, (i) the Employee shall have
no right to borrow against the Policy during the Term of this Agreement,
and (ii) the Employee or his or her permitted transferee shall not have
the right to surrender, cancel or assign the Policy during the Term of
this Agreement.
(c) For purposes of this Agreement, an Employee who has a
Disability will continue to be considered an employee of the Corporation
until the occurrence of a Measurement Date.
6. Collateral Interest.
(a) Upon the occurrence of the Measurement Date, the
Corporation's interest in the Policy (the "Collateral Interest") shall be
determined in the following manner:
(i) Upon the Employee's Termination of Employment, or
upon a termination of this Agreement by either party in accordance
with Section 9 below, the Corporation shall be entitled to an
amount that is equal to that portion of the Policy's Cash Surrender
Value that does not exceed the Aggregate Premiums Paid, plus the
difference, if any, between the remaining Cash Surrender Value and
the Required Cash Surrender Value, all as determined at the time of
such Measurement Date.
<PAGE> 6
Page 6
(ii) Upon the Employee's Retirement, the Corporation
shall be entitled to an amount that is equal to that portion of the
Policy's Cash Surrender Value that does not exceed the Aggregate
Premiums Paid, plus the difference, if any, between the remaining
Cash Surrender Value and the Required Cash Surrender Value, all as
determined at the time of such Measurement Date. Despite the
foregoing, if, at the time of the Measurement Date, the Policy's
remaining Cash Surrender Value (after taking into account the
Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
(iii) Upon a Change of Control Event with respect to
the Employee, the Corporation shall be entitled to an amount that
is equal to that portion of the Policy's Cash Surrender Value that
does not exceed the Aggregate Premiums Paid. Despite the
foregoing, if, at the time of the Measurement Date, the Policy's
remaining Cash Surrender Value (after taking into account the
Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
(iv) Upon the death of the Employee, the Corporation
shall be entitled to that portion of the Policy's death proceeds
that exceeds the Employee's Death Benefit.
(b) Subject to Section 6(d) below, the Corporation's
Collateral Interest in the Policy, as determined in Section 6(a) above,
shall be paid to the Corporation in one of the following ways, as elected
by the Employee, within 30 days of the applicable Measurement Date, and
shall be paid as soon as is reasonably practical after the applicable
Measurement Date, but in no event more than 90 days after that date:
(i) Surrender, or partially surrender, the Policy and
pay to the Corporation (or arrange for the Insurer to pay directly
to the Corporation to the extent of the proceeds payable on
surrender) an amount equal to the Corporation's Collateral
Interest;
(ii) Retain the Policy and take a loan out on the
Policy and pay to the Corporation an amount equal to the
Corporation's Collateral Interest, provided that the Corporation
shall not be responsible for any interest that may accrue on any
such loan;
(iii) Retain the Policy and, from the Employee's
separate funds, pay to the Corporation an amount equal to the
Corporation's Collateral Interest; or
<PAGE> 7
Page 7
(iv) Transfer ownership of the Policy, and all rights
thereunder, to the Corporation, provided that the Cash Surrender
Value of the Policy is at least equal to the Corporation's
Collateral Interest at the time of the transfer.
(c) If the Measurement Date is a result of the Employee's
death, the Corporation's Collateral Interest in the Policy, as determined
in Section 6(a) above, shall be paid from the Policy's death proceeds to
the Corporation as soon as is reasonably practical after the Employee's
death.
(d) Despite Section 6(b) above, if, at the time of the
applicable Measurement Date, the Tax Limitation Date has not occurred,
the Corporation shall have the right, in its sole discretion, to retain
its Collateral Interest in the Policy under the terms of this Agreement
as if the Measurement Date had not occurred until such time as the Tax
Limitation Date occurs (or such shorter period of time, as determined by
the Corporation, in it sole discretion). Upon the occurrence of the Tax
Limitation Date (or such earlier date), the Corporation shall be paid its
Collateral Interest, together with any additional premium payments, if
any, it has made on the Policy since the Measurement Date and earnings on
the Collateral Interest and the additional premium payments, as such
earnings are determined by reference to the performance of the Policy
during the period from the date of the applicable Measurement Date to the
occurrence of the Tax Limitation Date (or such earlier date).
(e) If, at the time of the applicable Measurement Date, the
Corporation has pledged the Policy as collateral for a loan, the
Corporation shall take all steps that are necessary to ensure that any
such pledge of the Policy is promptly released. If this is not done, the
Corporation's Collateral Interest shall be reduced to the extent of the
outstanding loan balance that relates to such pledge, and the Employee,
or his or her beneficiary, shall have the right to pay off the loan that
encumbers the Policy and to receive a release of the pledge and to pay to
the Corporation its remaining Collateral Interest.
(f) If the Employee fails to exercise any of the options
under Section 6(b) above within a 30-day period following the applicable
Measurement Date, by providing written notice of such election to the
Corporation, the Corporation shall be entitled, but not required, to
exercise the right to surrender the Policy and to receive the Policy's
Cash Surrender Value, to the extent of the Corporation's Collateral
Interest, or to transfer the ownership of and beneficial interest in the
Policy to the Corporation, and to pay to the Employee, in either case,
the Employee's interest, if any, in the Policy's Cash Surrender Value or
death proceeds.
(g) The Corporation agrees to keep records of its premium
payments and to furnish the Insurer with a statement of its Collateral
Interest whenever the Insurer requires such statement.
<PAGE> 8
Page 8
(h) Concurrent with the signing of this Agreement, the
Employee will collaterally assign the Policy to the Corporation, in the
form of the Collateral Assignment Agreement, as security for the payment
of the Collateral Interest, which assignment shall not be altered or
changed without the consent of the Corporation.
(i) Promptly following the Employee's death, the
Corporation and the Employee's designated beneficiary under the Policy
shall take all steps necessary to collect the death proceeds of the
Policy by submitting the proper claims forms to the Insurer. The
Corporation shall notify the Insurer of the amount of the Employee's
Death Benefit and the Corporation's Collateral Interest in the Policy as
a result of such death. Such amounts shall be paid, respectively, by the
Insurer to the Employee's designated beneficiary and the Corporation.
(j) The Corporation shall cooperate in effecting any full
or partial policy surrender, policy loan, or surrender of paid-up
additions requested by the Employee related to the Employee's exercise of
any options provided in Section 6(b) above, provided that the Corporation
receives payment in full for its Collateral Interest in the Policy.
(k) If the Employee elects to retain the Policy in
accordance with Section 6(b) above, the Corporation shall (1) assign its
Collateral Interest in the Policy to the Employee, (2) execute and file
with the Insurer an appropriate release of the Corporation's Collateral
Interest in the Policy and (3) have no further interest in the Policy;
provided that, in all instances, the Corporation receives payment in full
for its Collateral Interest in the Policy. Further, the Employee hereby
acknowledges, understands and agrees that, upon the release of the
Corporation's Collateral Interest, the Corporation shall not have any
responsibility for the future performance of the Policy and shall have no
obligation to make any additional premium payments.
7. Insurer Not a Party. The Insurer is not a party to this
Agreement, shall in no way be bound by or charged with notice of its terms, and
is expressly authorized to act only in accordance with the terms of the Policy.
The Insurer shall be fully discharged from any and all liability under the
Policy upon payment or other performance of its obligations in accordance with
the terms of the Policy. The Insurer is authorized to recognize the
Corporation's right to borrow without the Insurer being responsible for the
calculation of the amounts permitted to be borrowed and without investigations
of the validity or amount of the request by the Corporation to borrow. The
signature of the Corporation shall be sufficient for the exercise of any rights
under the Policy granted to the Corporation under this Agreement.
<PAGE> 9
Page 9
8. Named Fiduciary; Claims Procedure.
(a) The Corporation's Administration Committee is the named
fiduciary of the Management Life Insurance Plan of which this Agreement
is the written instrument.
(b) The following claims procedure shall be followed in
handling benefit claims under this Agreement:
(i) The Employee, or his or her beneficiary, (the
"Claimant"), shall file a claim for benefits by notifying the
Corporation in writing. If the claim is wholly or partially
denied, the Corporation shall provide a written notice within 90
days specifying the reasons for the denial, the provisions of this
Agreement on which the denial is based, and additional material or
information, if any, that is necessary for the Claimant to receive
benefits. Such written notice shall also indicate the steps to be
taken by the Claimant if a review of the denial is desired.
(ii) If a claim is denied, and a review is desired,
the Claimant shall notify the Corporation in writing within 60 days
after receipt of written notice of a denial of a claim. In
requesting a review, the Claimant may review plan documents and
submit any written issues and comments the Claimant feels are
appropriate. The Corporation shall then review the claim and
provide a written decision within 60 days of receipt of a request
for a review. This decision shall state the specific reasons for
the decision and shall include references to specific provisions of
this Agreement, if any, upon which the decision is based.
(iii) In no event shall the Corporation's liability
under this Agreement exceed the amount of proceeds from the Policy.
9. Amendment of Agreement; Termination. This Agreement shall
not be modified or amended except by a writing signed by the Corporation and
the Employee. Either party to this Agreement may terminate it by giving the
other party advance written notice.
10. Binding Agreement. This Agreement shall be binding upon the
heirs, administrators, executors, successors and assigns of each party to this
Agreement.
11. State Law. This Agreement shall be subject to and be
construed under the internal laws of the State of Texas.
12. Validity. In case any provision of this Agreement shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Agreement, but this Agreement shall be
construed and enforced as if such illegal or invalid provision had never been
inserted in this Agreement.
<PAGE> 10
Page 10
13. Not a Contract of Employment. The terms and conditions of
this Agreement shall not be deemed to constitute a contract of employment
between the Corporation and the Employee. Such employment is hereby
acknowledged to be an "at will" employment relationship that can be terminated
at any time for any reason, with or without cause, unless expressly provided in
a separate written employment agreement. Nothing in this Agreement shall be
deemed to give the Employee the right to be retained in the service of the
Corporation or to interfere with the right of the Corporation to discipline or
discharge the Employee at any time.
14. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with regard to the subject matter of this
Agreement and supersedes all previous negotiations, agreements and commitments
in respect thereto. No oral explanation or oral information by either of the
parties to this Agreement shall alter the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first written above.
"Corporation"
Anadarko Petroleum Corporation
a Delaware corporation
By: _____________________________________
Senior Vice President, Administration
"Employee"
_________________________________________
<PAGE> 11
Page 11
COLLATERAL ASSIGNMENT
FOR
MANAGEMENT LIFE INSURANCE PLAN
This COLLATERAL ASSIGNMENT (this "Assignment") is made and entered into
as of July 10, 1995, by and between 1~ (the "Employee"), as both the owner of
and insured under a life insurance policy, No. _______ (the "Policy"), issued
by Sun Life of Canada (the "Insurer"), and Anadarko Petroleum Corporation, a
Delaware corporation (the "Corporation").
RECITALS
A. The Employee desires to insure his or her life for the
benefit and protection of his or her family under the Policy (as defined
below);
B. The Corporation desires to help the Employee provide
insurance for the benefit and protection of his or her family by providing
funds from time to time to pay the premiums due on the Policy, as more
specifically provided for in the Plan Agreement for the Management Life
Insurance Plan (the "Agreement"), entered into between the Employee and the
Corporation as of the date hereof; and
C. In consideration of the Corporation agreeing to provide such
funds in accordance with the terms and conditions of the Agreement, the
Employee agrees to grant to the Corporation, as a security interest in the
Policy, a collateral security interest for the payment of the Corporation's
Collateral Interest (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Assignment agree
as follows:
15. Assignment. The Employee hereby assigns, transfers and sets
over to the Corporation, its permitted successors and assigns certain rights in
the Policy, including any and all supplemental extra benefit riders or
agreements issued under the Policy, subject to all the terms and conditions of
the Policy, the Agreement and this Assignment. The Employee, by this
Assignment, and the Corporation by acceptance of this Assignment, hereby agree
to the conditions and provisions set forth in this Assignment. This Assignment
is made, and the Policy is to be held as collateral security for, any and all
liabilities of the Employee to the Corporation, either now existing, or that
may hereafter arise, pursuant to the terms of the Agreement.
<PAGE> 12
Page 12
16. Definitions. For purposes of this Assignment, unless
otherwise clearly apparent from the context, the following phrases or terms
shall have the following indicated meanings:
(a) "Aggregate Premiums Paid" shall mean, at any time, an
amount equal to (i) the cumulative premiums paid by the Corporation under
the Policy, less (ii) the amount of any policy dividends or interest
thereon paid in cash to the Corporation or used by the Corporation to
make premium payments, less (iii) any policy loans to the Corporation and
accrued interest thereon at such time. Despite the foregoing, Aggregate
Premiums Paid shall not include extra benefit riders or agreements, other
than those providing additional life insurance coverage on the insured.
(b) "Base Annual Salary" shall mean the base annual
compensation, excluding bonuses, commissions, overtime, relocation
expenses, incentive payments, non-monetary awards, directors fees and
other fees, paid to the Employee for employment services rendered to the
Corporation, before reduction for compensation deferred pursuant to all
qualified, non-qualified and Code Section 125 plans of the Corporation.
For purposes of determining the Employee's Base Annual Salary as of a
particular Measurement Date, the Employee's Base Annual Salary as of the
most recent preceding July 1 will be used (which means that the
Employee's Base Annual Salary will be changed under this Assignment only
once a year to reflect the actual increase or decrease in the Employee's
actual base salary during the year preceding the applicable July 1).
(c) "Cash Surrender Value" shall mean an amount that
equals, at any specified time, the cash surrender value provided under
the Policy at that time.
(d) "Change of Control Event" shall mean the Employee's
termination of employment with the Corporation following a "Change of
Control," as such term is defined in either the Company's (i) Key
Employee Change of Control Contract or (ii) Change in Control Severance
Pay Plan. The applicable definition of "Change of Control" will be based
on the plan that the terminating Employee participates in, and if the
Employee participates in both plans, the definition that is most
favorable to the Employee, in terms of allowing the Employee to receive a
more favorable benefit under this Assignment, shall be the applicable
definition. Despite the foregoing, a Change of Control Event shall not
occur with respect to the Employee unless at the time of a Change of
Control, the Employee was eligible for a benefit under either the Key
Employee Change of Control Contract or the Change in Control Severance
Pay Plan.
(e) "Employee's Death Benefit" shall mean an amount that is
equal to (i) the Employee's Base Annual Salary, determined as of the date
of his or her death, multiplied by two, less (ii) $25,000.00.
<PAGE> 13
Page 13
(f) "Measurement Date" shall mean the earlier of:
(i) The Employee's Termination of Employment;
(ii) The termination of the Agreement in
accordance with Section 9 of the Agreement;
(iii) The occurrence of a Change of Control Event;
(iv) The Employee's Retirement; or
(v) The Employee's death.
(g) "Disability" shall mean (i) a period of disability
during which the Employee qualifies for benefits under a disability plan
sponsored by the Corporation, (ii) if the Employee does not participate
in such a plan, a period of disability during which the Employee would
have qualified for benefits under such a plan had the Employee been a
participant in such a plan, or (iii) if the Corporation no longer
sponsors a long-term disability plan, a permanent disability as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(h) "Required Cash Surrender Value" shall mean, at the time
of a specified Measurement Date, the minimum amount of cash surrender
value that is needed in the Policy to support a death benefit that is
equal to one-half multiplied by the Employee's Base Annual Salary,
determined at the time of the specified Measurement Date, assuming that
the Policy will be held without surrender or loan until the Employee
reaches age 90 and that the fixed interest rate to be used to project
earnings on the Policy up to the specified age is the Insurer's announced
interest rate under the Policy at the time of the specified Measurement
Date. Despite the foregoing, if a Change of Control Event occurs with
respect to the Employee, the Base Annual Salary that is used to calculate
the Required Cash Surrender Value shall be the higher of the Employee's
Base Annual Salary at the time of his or her Termination of Employment or
at the time of the Change of Control Event.
(i) "Retirement" shall mean retirement (whether early,
normal or late) as defined under the Corporation's qualified retirement
plan, as that plan may be amended from time to time.
(j) "Tax Limitation Date" shall mean the date on which the
Policy will no longer be subject to those provisions of Section
7702(f)(7) and Section 7702A of the Internal Revenue Code of 1986, as
amended (the "Code"), that would cause any loan, distribution or
surrender from or under the Policy to be taxed under those Sections or
Section 72 of the Code.
<PAGE> 14
Page 14
(k) "Termination of Employment" shall mean the ceasing of
employment with the Company for any reason other than Retirement,
Disability, death, an authorized leave of absence or a Change of Control
Event.
17. Corporation's Rights.
(a) The Corporation's interests in and to the Policy shall
be specifically limited to (i) the right to be paid the Collateral
Interest upon the occurrence of the Measurement Date in accordance with
Sections 3(b) and (c) below, and (ii) the right to obtain one or more
loans or advances on the Policy, either from the Insurer or, at any time,
from other persons, and to pledge or assign the Policy as security for
such loans or advances; provided, however, that such loans or pledges
shall not in the aggregate exceed the Aggregate Premiums Paid by the
Corporation at any specified date without the written consent of the
Employee. With respect to (ii) above, the sole signature of a duly
authorized representative of the Corporation shall be sufficient for the
exercise of the Corporation's right to borrow from the Policy or to
pledge the Policy.
(b) Upon the occurrence of the Measurement Date, the
Corporation's interest in the Policy (the "Collateral Interest") shall be
determined in the following manner:
(i) Upon the Employee's Termination of
Employment, or upon a termination of the Agreement by either party
in accordance with Section 9 of the Agreement, the Corporation
shall be entitled to an amount that is equal to that portion of the
Policy's Cash Surrender Value that does not exceed the Aggregate
Premiums Paid, plus the difference, if any, between the remaining
Cash Surrender Value and the Required Cash Surrender Value, all as
determined at the time of such Measurement Date.
(ii) Upon the Employee's Retirement, the
Corporation shall be entitled to an amount that is equal to that
portion of the Policy's Cash Surrender Value that does not exceed
the Aggregate Premiums Paid, plus the difference, if any, between
the remaining Cash Surrender Value and the Required Cash Surrender
Value, all as determined at the time of such Measurement Date.
Despite the foregoing, if, at the time of the Measurement Date, the
Policy's remaining Cash Surrender Value (after taking into account
the Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
<PAGE> 15
Page 15
(iii) Upon a Change of Control Event with respect
to the Employee, the Corporation shall be entitled to an amount
that is equal to that portion of the Policy's Cash Surrender Value
that does not exceed the Aggregate Premiums Paid. Despite the
foregoing, if, at the time of the Measurement Date, the Policy's
remaining Cash Surrender Value (after taking into account the
Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
(iv) Upon the death of the Employee, the
Corporation shall be entitled to that portion of the Policy's death
proceeds that exceeds the Employee's Death Benefit.
(c) Subject to Section 3(e) below, the Corporation's
Collateral Interest in the Policy, as determined in Section 3(b) above,
shall be paid to the Corporation in one of the following ways, as elected
by the Employee, within 30 days of the applicable Measurement Date, and
shall be paid as soon as is reasonably practical after the applicable
Measurement Date, but in no event more than 90 days after that date:
(i) Surrender, or partially surrender, the
Policy and pay to the Corporation (or arrange for the Insurer to
pay directly to the Corporation to the extent of the proceeds
payable on surrender) an amount equal to the Corporation's
Collateral Interest;
(ii) Retain the Policy and take a loan out on the
Policy and pay to the Corporation an amount equal to the
Corporation's Collateral Interest, provided that the Corporation
shall not be responsible for any interest that may accrue on any
such loan;
(iii) Retain the Policy and, from the Employee's
separate funds, pay to the Corporation an amount equal to the
Corporation's Collateral Interest; or
(iv) Transfer ownership of the Policy, and all
rights thereunder, to the Corporation, provided that the Cash
Surrender Value of the Policy is at least equal to the
Corporation's Collateral Interest at the time of the transfer.
(d) If the Measurement Date is a result of the Employee's
death, the Corporation's Collateral Interest in the Policy, as determined
in Section 3(b) above, shall be paid from the Policy's death proceeds to
the Corporation as soon as is reasonably practical after the Employee's
death.
<PAGE> 16
Page 16
(e) Despite Section 3(c) above, if, at the time of the
applicable Measurement Date, the Tax Limitation Date has not occurred,
the Corporation shall have the right, in its sole discretion, to retain
its Collateral Interest in the Policy under the terms of this Assignment
as if the Measurement Date had not occurred until such time as the Tax
Limitation Date occurs (or such shorter period of time, as determined by
the Corporation, in it sole discretion). Upon the occurrence of the Tax
Limitation Date (or such earlier date), the Corporation shall be paid its
Collateral Interest, together with any additional premium payments, if
any, it has made on the Policy since the Measurement Date and earnings on
the Collateral Interest and the additional premium payments, as such
earnings are determined by reference to the performance of the Policy
during the period from the date of the applicable Measurement Date to the
occurrence of the Tax Limitation Date (or such earlier date).
(f) If, at the time of the applicable Measurement Date, the
Corporation has pledged the Policy as collateral for a loan, the
Corporation shall take all steps that are necessary to ensure that any
such pledge of the Policy is promptly released. If this is not done, the
Corporation's Collateral Interest shall be reduced to the extent of the
outstanding loan balance that relates to such pledge, and the Employee,
or his or her beneficiary, shall have the right to pay off the loan that
encumbers the Policy and to receive a release of the pledge and to pay to
the Corporation its remaining Collateral Interest.
(g) If the Employee fails to exercise any of the options
under Section (c) above within a 30-day period following the applicable
Measurement Date, by providing written notice of such election to the
Corporation, the Corporation shall be entitled, but not required, to
exercise the right to surrender the Policy and to receive the Policy's
Cash Surrender Value, to the extent of the Corporation's Collateral
Interest, or to transfer the ownership of and beneficial interest in the
Policy to the Corporation, and to pay to the Employee, in either case,
the Employee's interest, if any, in the Policy's Cash Surrender Value or
death proceeds.
4. Employee's Rights. For purposes of this Assignment, an
Employee who has a Disability will continue to be considered an employee of the
Corporation until the occurrence of a Measurement Date.
5. Incidents of Ownership. Except as specifically granted in
this Assignment to the Corporation, the Employee shall retain all incidents of
ownership in the Policy, other than the right to cancel, surrender or assign
the Policy or borrow against the Policy (except as provided in Section 3
above), including, but not limited to, the right to change the beneficiary of
that portion of the death proceeds to which he or she is entitled, and the
right to exercise all settlement options permitted by the terms of the Policy;
provided, however, that all rights retained by the Employee shall be subject to
the terms and conditions of this Assignment and the Agreement.
<PAGE> 17
Page 17
6. Endorsement. The Corporation shall hold the Policy while
this Assignment is operative and, upon request, forward the Policy to the
Insurer, without unreasonable delay, for endorsement of any designation or
change of beneficiary, any election of optional mode of settlement, or the
exercise of any other right reserved by the Employee in this Assignment.
7. Insurer. The Insurer is hereby authorized to recognize the
Corporation's claims to rights hereunder without investigating the reason for
any action taken by the Corporation, the validity or amount of any of the
liabilities of the Employee to the Corporation under the Agreement, the
existence of any default therein, the giving of any notice required herein, or
the application to be made by the Corporation of any amounts to be paid to the
Corporation. The signature of the Corporation shall be sufficient for the
exercise of any rights under the Policy assigned hereby to the Corporation and
the receipt of the Corporation for any sums received by it shall be a full
discharge and release therefor to the Insurer. The Insurer shall not be
responsible for the sufficiency or validity of this Assignment and is not a
party to the Agreement (or any other similar split-dollar agreement) between
the Corporation and Employee.
8. Reassignment. Upon the full payment of the Corporation's
Collateral Interest in accordance with the terms and conditions of this
Assignment and the Agreement, the Corporation shall reassign to the Employee,
if the Employee retains the Policy, the Policy and all specific rights included
in this Assignment.
9. Captions. The captions of the Sections of this Assignment
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
10. Amendment of Assignment; Termination. This Assignment shall
not be modified, amended or terminated, except by a writing signed by the
Corporation and the Employee; provided, however, that this Assignment may be
terminated by either party if that Party terminates the Agreement in accordance
with Section 9 of the Agreement and the obligations of the party terminating
the Agreement are performed in full under the Agreement.
11. Binding Agreement; Assigns. This Assignment shall be binding
upon the heirs, administrators, executors and permitted successors and assigns
of each party to this Assignment. The Employee shall not assign his or her
rights under this Assignment without the prior written consent of the
Corporation.
12. State Law. This Assignment shall be subject to and be
construed under the internal laws of the State of Texas.
13. Validity. In case any provision of this Assignment shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Assignment, but this Assignment shall be
construed and enforced as if such illegal or invalid provision had never been
inserted in this Assignment.
<PAGE> 18
Page 18
IN WITNESS WHEREOF, the Employee and the Corporation have signed this
Assignment as of the date first written above.
"Corporation"
Anadarko Petroleum Corporation
a Delaware corporation
By: _____________________________________
Senior Vice President, Administration
"Employee"
_________________________________________
<PAGE> 1
EXHIBIT 12
ANADARKO PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF COMPUTATION OF RATIOS
OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
FIVE YEARS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Years Ended December 31
----------------------------------------------------------------------------
thousands 1995 1994 1993 1992 1991
------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Gross Income $65,624 $96,361 $106,824 $68,311 $75,431
Rentals 2,457 2,814 3,069 2,737 2,043
------- ------- -------- ------- -------
Earnings 68,081 99,175 109,893 71,048 77,474
======= ======= ======== ======= =======
Gross Interest Expense 52,557 41,635 38,000 36,620 36,829
Rentals 2,457 2,814 3,069 2,737 2,043
------- ------- -------- ------- -------
Fixed Charges $55,014 $44,449 $ 41,069 $39,357 $38,872
======= ======= ======== ======= =======
Ratio of Earnings to Fixed
Charges 1.24 2.23 2.68 1.81 1.99
======= ======= ======== ======= =======
</TABLE>
The ratios of earnings to fixed charges were computed by dividing earnings by
fixed charges. For this purpose, earnings include income before income taxes
and fixed charges. Fixed charges include interest and amortization of debt
expenses, and the estimated interest component of rentals.
During the five years ended December 31, 1995, there were no shares of
preferred stock outstanding. Accordingly, the ratio of earnings to combined
fixed charges and preferred stock dividends for each of the five years is the
same as the ratio of earnings to fixed charges.
<PAGE> 1
Page 1
EXHIBIT 13
*****************************
* *
* SUMMARY FINANCIAL DATA* *
* *
*****************************
<TABLE>
<CAPTION>
% Change
Millions except per share amounts 1995 94-95 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $434.0 (10) $482.5 $482.0 $379.7 $336.6
Operating Income 64.5 (32) 94.2 104.1 67.6 73.0
Net Income before Cumulative Effect
of Changes in Accounting Principles 21.0 (49) 41.1 40.0 27.3 32.4
Net Income 21.0 (49) 41.1 117.4 27.3 32.4
Net Cash from Operating Activities 248.3 4 239.7 274.3 171.6 160.0
Per Common Share
Net Income before Cumulative Effect
of Changes in Accounting Principles 0.36 (49) 0.70 0.70 0.49 0.59
Net Income 0.36 (49) 0.70 2.05 0.49 0.59
Dividends 0.30 - 0.30 0.30 0.30 0.30
Average Shares Outstanding 58.9 - 58.8 57.2 55.3 55.0
Capital Expenditures 331 (22) 423 264 360 166
- -----------------------------------------------------------------------------------------------------------------
Long-term Debt 674 7 629 543 647 440
Stockholders' Equity 910 1 900 864 657 641
- -----------------------------------------------------------------------------------------------------------------
Total Assets $2,267 6 $2,142 $2,023 $1,905 $1,676
- -----------------------------------------------------------------------------------------------------------------
Oil Reserves (MMBbls) 219.2 39 157.4 78.5 80.3 45.8
Gas Reserves (Tcf) 1.84 (4) 1.91 1.88 1.73 1.74
Total Reserves (MMEEBs) 526.3 10 476.4 391.1 368.0 336.5
- -----------------------------------------------------------------------------------------------------------------
Worldwide Finding Cost ($/EEB) $2.74 (1) $2.76 $4.07 $5.43 $3.13
Worldwide Reserve Replacement
(% of Production) 226 (27) 308 162 200 166
</TABLE>
* Consolidated for Anadarko Petroleum Corporation (referred to herein as
Anadarko) and its principal subsidiaries, including Anadarko Gathering
Company, Anadarko Trading Company and Anadarko Algeria Corporation. See
Management's Discussion and Analysis.
<PAGE> 2
Page 2
INTERNATIONAL
OPERATIONS
Anadarko is active in a number of high-potential projects overseas. These
projects complement the Company's base of domestic operations. The current
areas of major exploration and development drilling activity are Algeria and
Indonesia. Anadarko also signed an agreement in 1995 to explore Eritrea's Red
Sea off the east coast of Africa. Other project areas being studied for
possible future investments include geologic basins in South America, the
Middle East and Asia.
In determining Anadarko's involvement in international ventures, the Company
focuses on selected regional areas with known hydrocarbon systems that offer
multiple geologic plays and potential. Rigorous economic analysis and the best
geologic and geophysical technology is applied to achieve a proper mix of risk
and reward.
In 1996, Anadarko plans to invest $176 million in international exploration and
development, an increase of 227 percent over 1995, due primarily to investments
that should bring initial production volumes on-stream in Algeria in 1997. Over
the past three years, Anadarko's investment in international exploration totals
$137 million, or about 14 percent of total capital spending.
At the end of 1995, about 18 percent of Anadarko's total energy reserves were
outside the U.S. compared to nine percent at the end of 1994 and three percent
at the end of 1993.
The following sections describe the Company's major areas of international
operations.
<PAGE> 3
Page 3
*************
* *
* ALGERIA *
* *
*************
Anadarko's largest international venture lies in the Sahara Desert of North
Africa. Beneath these vast sands, Anadarko estimates it has discovered about
1.5 billion barrels (gross) of crude oil and condensate from five discoveries.
An industry report released in July 1995 by PetroConsultants says that more oil
was found in Algeria in 1994 than anywhere else on earth. Most of that oil was
discovered by Anadarko.
In 1995, the Company drilled one exploratory well and four exploratory
delineation wells in Algeria. Capital spending for the year totaled $41
million. To date, the Company's aggressive exploration programs have discovered
three commercial oil fields. Tremendous exploration potential remains in the
contract area.
NEW FIELD DISCOVERY During March 1995, Anadarko and partners made a significant
oil discovery when the Hassi Berkine South No. 1B (HBNS-1B) exploratory well
was completed and tested at 16,000 barrels of oil per day (BOPD) and 17.8
million cubic feet per day (MMcf/d) of gas. A second well successfully
confirmed field continuity after being drilled four miles southwest of the
discovery well; the HBNS-2 well flowed 3,631 BOPD and 3.9 MMcf/d of gas in
September 1995. The HBNS-3 well flowed at a Company-record flow rate of 17,682
BOPD and 19.8 MMcf/d of gas through a 90/64-inch choke. Test results from the
HBNS-3 were announced in February 1996. A third field delineation well, the
HBNS-4, was drilling when this report was released for printing.
BERKINE EAST FIELD In the third quarter of 1995, a successful field delineation
well - the Berkine East No. 2 (BKE-2) well, located on Block 404 in the
Ghadames Basin, tested at 17,309 BOPD and 3.9 MMcf/d of gas through two
3/4-inch chokes. The well encountered 190 feet of pay in the Triassic sandstone
and confirmed the reservoir discovered in the BKE-1 well, announced in May
1994. In October 1995, a Spanish exploration company (Cepsa) announced a
significant oil discovery called the ORD-2 located just south of Anadarko's
exploration block boundary. This well effectively extended the reservoir limits
of the BKE Field. Anadarko and partners are currently discussing with Cepsa the
prospects for delineation and development of the BKE/ORD complex to assure the
most efficient and effective recovery of reserves.
HASSI BERKINE FIELD In July 1995, the Hassi Berkine No. 4 (HBN-4) delineation
well was drilled about three miles southwest of the HBN-1 Field discovery well
and about three miles south of the HBN-2 delineation well. The well was
drilled structurally down-dip to determine the limits of the HBN Field. The
well encountered thick reservoir quality sands, but was structurally low to the
oil-water contact. Although the HBN-4 well was a dry hole, it provided useful
data for field delineation and reserve estimates for the HBN Field. The well
was cased and could be used as a future injection well.
RESERVES In 1995, Anadarko increased its estimate of total discovered oil
from the five discoveries to approximately 1.5 billion barrels (gross) of crude
oil and condensate. Additional drilling and production
<PAGE> 4
Page 4
information will be needed to more accurately determine total reserves. Based
on preliminary development studies, Anadarko has booked 92.5 million barrels
(net) through December 31, 1995. See Supplemental Information on Oil and Gas
Producing Activities under Item 8 of the Form 10-K.
1996 DEVELOPMENT ACTIVITY Anadarko and partners are working to bring the three
commercial discoveries in Algeria on production and to further delineate the
EME/EMK Complex. The partners and SONATRACH, the national oil and gas
enterprise of Algeria, have applied to the Algerian Ministry of Energy for
Provisional Exploitation Authorization (PEA) for Stage I production from the
HBN and HBNS Fields. Under the terms of the PEA, Stage I production of about
40,000 BOPD (gross), based on our best current estimate, could begin in 1997 at
an estimated total cost of $210 million (gross).
During 1996, Commerciality Reports will be filed requesting Exploitation
Licenses (EL) for the HBN and HBNS Fields based on existing data and the
results of the delineation well currently drilling. The estimated cost for full
development of both Fields is $1.2 billion, which would be shared by all part-
ners and SONATRACH under the terms of the Production Sharing Agreement (PSA).
The Company estimates a multi-rig development drilling program could be
underway at the HBN and HBNS Fields in the second half of 1996.
Initial production from the HBN and HBNS Fields will be transported to Haoud El
Hamra, SONATRACH's main oil terminal in the area, using an existing pipeline
just north of Block 404. Subsequent stages of production will be moved through
a new 30-inch pipeline expected to be operational in 1997. The new line will
have the capacity to transport up to 400,000 BOPD. Anadarko has begun initial
steps to secure markets for the crude oil.
Delineation drilling is planned in 1996 in the BKE Field, also located on Block
404. Drilling plans will be coordinated with Cepsa's delineation of the ORD
discovery to the south. Anadarko and Cepsa are coordinating a joint development
plan for the discoveries. In 1996, Anadarko may apply for an EL for the BKE
Field.
Drilling operations will commence in the first quarter of 1996 on Block 208
near the EME-1 discovery well, announced in February 1994. A delineation well,
EME-2, will be drilled about 1.5 miles east of the discovery well. The EME-1
well flowed 1,860 BOPD, 6,250 barrels of condensate per day (BCPD) and 80
MMcf/d of gas from four zones.
<PAGE> 5
Page 5
1996 EXPLORATION ACTIVITY Anadarko expects to have two drilling rigs active
throughout most of the year drilling both exploration and delineation wells.
The Berkine Northeast No. 1 (BKNE-1), a wildcat on Block 404, should begin
drilling in the first quarter of 1996. In addition, drilling began in January
on an exploratory prospect called the Takouazet South No. 1 (TAKS-1) on Block
245, one of two remaining undrilled blocks and the southern-most block on the
exploration area that extends over 240 miles from north to south.
Since Anadarko signed its PSA with SONATRACH in 1989, 35 other energy companies
from around the world have begun exploration or exploitation programs to
develop oil or natural gas reserves in Algeria.
Anadarko's interest in the Algerian PSA is 50 percent. Under the terms of the
PSA, liquid hydrocarbons that are discovered, developed and produced will be
shared by SONATRACH, Anadarko and its two partners LASMO and Maersk. SONATRACH
is responsible for its share (51 percent) of development and production costs.
In addition, Anadarko and its partners are entitled to recover exploration
costs out of production in the exploitation phase. For additional information,
see Properties and Activities - International under Item 1 and Marketing
Strategies and Additional Factors Affecting Business under Item 7 of the Form
10-K.
***************
* *
* INDONESIA *
* *
***************
Anadarko's global quest for hydrocarbons is ongoing on the Jabung Block in the
Jambi Province of central Sumatra, where the Company has maintained an active
exploration program since 1992. In 1995, Anadarko and partners drilled two
exploration wells and two delineation wells on the two million acre concession
area. Anadarko's net capital spending was $7 million for 1995 and is estimated
at $3 million in 1996.
NORTH GERAGAI FIELD In the first quarter of 1995, Anadarko and partners
announced their first successful exploration well in Indonesia. The North
Geragai No. 1. well flowed 5,100 BOPD, 30 MMcf/d of gas and 350 BCPD from
multiple zones. The No. 2 delineation well successfully established Field
continuity, after being drilled one mile southeast of the discovery well, and
it flowed 2,967 BOPD, 10.9 MMcf/d of gas and 115 BCPD from multiple zones.
<PAGE> 6
Page 6
A No. 3 well was drilled 1.5 miles northwest of the discovery well and it
tested 2,800 BOPD and 2.4 MMcf/d of gas from multiple zones. The North Geragai
No. 4 well began drilling in February 1996.
Anadarko and partners are currently discussing commerciality of the North
Geragai Field. If determined commercial, a Plan of Development should be
submitted to Pertamina, the state oil company of Indonesia, in the first half
of 1996 and oil production could begin in early 1997. Oil would be transported
15 miles northeast to the Java Sea. Two natural gas pipelines are planned in
the area with completion anticipated in late 1998.
THE NORTHEAST BETARA PROSPECT Another exploration prospect drilled about 25
miles northwest of the North Geragai Field - the Northeast Betara No. 1 -
encountered 130 feet of hydrocarbon-bearing sands. Three intervals were tested
and flowed at a combined rate of 420 BCPD and 22 MMcf/d of gas, of which about
55 percent was carbon dioxide. Further evaluation is required and the Northeast
Betara No. 2 should begin drilling in March 1996 to look for the Field's oil
rim.
Operator Santa Fe Energy Resources, Kerr-McGee Corporation and Anadarko each
hold a 33.33-percent interest in the Indonesia project.
*************
* *
* ERITREA *
* *
*************
In September 1995, Anadarko signed an agreement to explore for oil and gas in
the Red Sea off the east coast of Africa in the nation of Eritrea. Anadarko was
the first energy company to secure such an agreement since Eritrea became an
independent nation in 1993, following a 30-year war with Ethiopia. Anadarko is
exploring the 6.7 million acre Zula Block and plans to invest up to $29 million
over the next several years.
The Red Sea is one of the world's most prospective, under-explored areas and,
because of Eritrea's struggle for independence, no wells have been drilled in
the area since 1977. However, the few wells drilled between 1965 and 1977
confirm the key elements required for an active hydrocarbon system - source,
trapping, seal and reservoir. Of the earlier wells drilled in the Red Sea, only
two were drilled on the Zula Block and neither was completed for production.
Review of existing seismic data shows that much of the Zula Block contains salt
features
<PAGE> 7
Page 7
and the Company's experience in the Gulf of Mexico will be beneficial in making
this play.
In the first quarter of 1996, Anadarko conducted a high-density aerial gravity
and magnetic survey over the Zula Block. The results of this survey will be
used to determine specific locations for the seismic acquisition program
scheduled for mid-year 1996.
Anadarko Eritrea Company, a wholly-owned subsidiary, opened an office in
Asmara, Eritrea, in December 1995. The Company owns a 100-percent interest in
the project but may take partners.
************
* *
* JORDAN *
* *
************
In January 1996, Anadarko and the Natural Resources Authority of the Hashemite
Kingdom of Jordan initialed a Production Sharing Agreement. The agreement
covers about 4.2 million acres and Anadarko has committed to spend at least $5
million during the first two and one-half years of the exploration period.
Anadarko plans to drill one stratigraphic test well in 1996 to confirm
existence of a working petroleum system. The Company anticipates the agreement
will be formally signed during the first quarter of 1996, following approval by
the Council of Ministers. Once executed, the agreement will be presented to the
Parliament for final approval. Anadarko owns a 100-percent interest in the
project but may take partners.
***********
* *
* CHINA *
* *
***********
Two million acres in China's Sichuan Basin in the Sichuan Province underwent
a complete geological, geophysical and engineering study in 1995. The study
stems from a 1994 joint-study agreement Anadarko signed with Chengdu Huachuan
Petroleum and Natural Gas Exploration and Development Corporation. Anadarko
owns a 100-percent interest in this project but may take partners. Pending the
conclusions of the current study, Anadarko could begin negotiations on a
production sharing contract in 1996.
<PAGE> 8
Page 8
ALGERIA MAP (GRAPHIC MATERIAL OMITTED)
<TABLE>
<CAPTION>
Million Trillion cubic
Barrels of Oil Feet of Gas
-----------------------------
<S> <C> <C>
MAJOR FIELDS AND ESTIMATED RESERVES
Hassi Messaoud 9,250 3.20
Rhourde El Baguel 580 0.55
Nezla 2.00
Brides 1.00
Gassi Touill 500 2.70
Rhourde Nouss 400 9.00
Tin Fouye 450 4.00
Ohanet 300
Mereksene 250
Stah 250
Alrar 235 5.00
La Reculee 0.35
Zarzaitine 1,200 5.00
Edjleh 220
<CAPTION>
Million cubic
ANADARKO DISCOVERIES Date Barrels of feet of gas
Announced Oil per Day per day
-------------------------------------
<S> <C> <C> <C>
COMMERCIAL FIELD DISCOVERIES AND ACTIVITY
Hassi Berkine Field
HBN-1 2/94 4,900 6.30
HBN-2 12/94 13,752 10.60
Hassi Berkine South Field
HBNS-1B 3/95 16,000 18.00
HBNS-2 9/95 3,631 3.90
HBNS-3 (testing)
HBNS-4 (drilling 2/96)
Berkine East Field
BKE-1 5/94 15,275 38.00
BKE-2 6/95 17,309 3.90
BKE-3 (proposed 1996)
<CAPTION>
Barrels of Million cubic
Date Barrels of Condensate feet of gas
Announced Oil per Day per day per day
---------------------------------------------------
<S> <C> <C> <C> <C>
OTHER DISCOVERIES AND ACTIVITY
EMK-1 2/93 1,972 1,750 17.30
EME-1 2/94 1,860 6,250 82.50
TAKS-1 (drilling 2/96)
BKNE (proposed 1996)
</TABLE>
<PAGE> 9
Page 9
DOMESTIC
OPERATIONS
Since its founding in 1959, Anadarko has been actively exploring and developing
major geologic basins of the U.S. - primarily in Kansas, Oklahoma, Texas and
offshore in the Gulf of Mexico. Domestic reserves of oil and gas are Anadarko's
core assets, comprising 82 percent of total reserves at the end of 1995. At the
present time, all of the Company's oil and gas production comes from domestic
fields.
Development Programs - Anadarko has a number of development strategies that are
designed to maximize recovery of existing reserves through development drilling
and other exploitation work, including secondary recovery (waterflood)
projects. Anadarko often acquires producing properties with upside potential in
strategic areas, and may elect to sell non-strategic producing properties and
reinvest the proceeds in core areas. The Company has been active in applying
modern cost-effective technology to better manage production operations and
reserve recovery.
Exploration Programs - Anadarko is an industry leader in successfully finding
new energy reserves in the mature hydrocarbon provinces of the U.S. The
Company's successful application of new technology, the careful attention to
risk and reward inherent in all exploration ventures, and an unwavering
commitment to continue exploration - all are key factors that make the effort
successful.
Anadarko's 1996 capital spending budget for domestic operations was set at $309
million compared to $277 million of capital expenditures in 1995. Over the past
three years, investment in domestic operations totaled $881 million, or 86
percent of total capital spending.
The following pages describe key projects underway in domestic operations.
<PAGE> 10
Page 10
********************
* *
* GULF OF MEXICO *
* *
********************
Because Anadarko remained active in exploration and development drilling
projects in the Gulf of Mexico over the past few years, the area has played an
increasingly important role for the Company in terms of reserves and production
volumes.
At the end of 1995, about 16 percent of the Company's total proved energy
reserves were located in the Gulf of Mexico where production volumes increased
25 percent from the 1994 volumes on an EEB basis. Anadarko's Gulf of Mexico
production in 1995 averaged 117 MMcf/d and 2,200 barrels of oil and condensate
per day. The production increase is primarily due to the installation of two
production platforms in late 1994.
During 1995, Anadarko was active in both sub-salt and conventional exploration
and development projects in the Gulf of Mexico, although some gas-oriented
projects were deferred due to low gas prices during the year.
THE SUB-SALT PROGRAM Anadarko's goal in 1995 was to drill four exploratory
tests on sub-salt prospects. To accomplish this objective, the Company
conducted extensive data analysis on its inventory of 20 sub-salt prospects
situated on 40 lease blocks in shallow waters (less than 1,000 feet deep) of
the Gulf of Mexico. More than $8 million was spent for new seismic acquisition
and processing in order to upgrade the prospect inventory. The evaluation was
completed and approved by partners late in the year and drilling began on three
sub-salt prospects by December 1995; the fourth well should begin in March
1996.
In 1996, the Company expects to drill two additional sub-salt wildcat wells and
assess the results of the four wells currently drilling. Activity in the
sub-salt program is expected to continue for several more years.
For years, energy explorers avoided drilling through salt structures. Seismic
data often proved unreliable and the drilling problems seemed insurmountable.
But with the advent of new technology came solutions. Although the industry is
still on a learning curve, the success of Anadarko and other operators
indicates that significant reserves can still be found in mature areas of the
Gulf of Mexico. Since 1990, the industry has made five sub-salt discoveries out
of about 15 exploratory wells. Anadarko owns interest in two of those
discoveries - Teak and Mahogany.
DEVELOPMENT OF THE MAHOGANY OIL FIELD In April 1995, after completion of the
third successful appraisal well, the Mahogany Field was declared commercial.
The Mahogany Field is the industry's first commercial sub-salt development,
located 80 miles offshore Louisiana at Ship Shoal South Addition 349 and 359 in
370 feet of water. The Field discovery well was announced in September 1993. A
fourth well is currently drilling and more wells will be drilled when it is
completed.
Construction of the platform began in May 1995. The platform will be capable of
handling 45,000 BOPD and 100 MMcf/d of gas and could support up to 20 wells.
Platform installation is expected in the third quarter of 1996 with production
beginning in late 1996.
<PAGE> 11
Page 11
Production from the initial completions is expected to reach 22,000 BOPD and 30
MMcf/d (gross) of gas. Production is expected to increase as additional
development wells are drilled and completed. Phillips Petroleum Company is the
operator. Anadarko and Phillips each have a 37.5-percent working interest in
the Mahogany development. Amoco Production Company owns a 25-percent working
interest.
CONVENTIONAL DRILLING OPERATIONS In 1995, Anadarko participated in three
conventional exploration and four development wells in the Gulf of Mexico. The
three exploration wells were dry holes and the four development wells were
successful and completed for production. In 1995, the Company and partners
installed a four-slot, braced caisson platform at Matagorda Island 635 No. 2
(A-1). A pipeline was installed to connect to the Matagorda Island 623 "B"
production platform for processing. Due to weak gas prices in 1995, the Company
elected to defer some potential gas projects.
The Company is continuing to develop its producing fields in the Gulf of
Mexico. In 1996, Anadarko has budgeted $9.5 million for ongoing development
operations at Matagorda Island 622/623/635/636, East Cameron 157 and Vermilion
78. Anadarko will also be participating in the installation of a production
platform operated by Amerada Hess at South Marsh Island 192.
************
* *
* ALASKA *
* *
************
Alaska still remains one of the United States' most prospective areas for oil
and gas exploration. Anadarko has been exploring on the North Slope with
partners since 1992 and is currently evaluating other prospective areas for
exploration in the future.
COLVILLE RIVER DELTA PROJECT During 1995, important progress was made in
delineating a 1994 oil field discovery adjacent to the Colville River Delta on
the North Slope of Alaska. At mid-year, one of the partners announced the
discovery of over 100 million barrels of oil. Plans were made for a full-scale
field delineation drilling effort during the winter of 1995-96 to determine the
commerciality of these discoveries.
The partners plan a two-phase delineation program which includes use of two
rigs to drill up to six delineation wells plus acquisition of new 3-D seismic
data across
<PAGE> 12
Page 12
the project area. Drilling is currently underway and depending on weather
conditions on the frozen tundra of the North Slope, the drilling activity could
extend into April 1996.
The new seismic data and drilling results will be used to determine the
commerciality of the field. The operator, Atlantic Richfield Co. (ARCO), and
partners are working on reducing drilling and field development costs - two
factors that could help make the play economic. In an innovative approach to
Alaskan development, advance work on engineering design and permitting is
already underway; if the field is proven commercial, this work should reduce
the time from declaring commerciality to first production.
Anadarko owns a 22-percent working interest in the Colville River Delta
Project.
**********************
* *
* SOUTHWEST KANSAS *
* *
**********************
Anadarko continues to explore and develop the oil and natural gas fields that
underlie the shallow Hugoton Gas Field in southwest Kansas. During 1995, the
Company drilled 92 wells in the area and invested over $30 million in capital
projects. Net production from the area was 85.9 billion cubic feet (Bcf) of gas
and 1.8 million barrels of oil during 1995 - which amounts to about 41 percent
of the Company's total production for the year. The area also accounted for
about 41 percent of total production in 1994.
In the Kansas Hugoton Field, production increased in 1994 following changes in
production allowables approved for the Hugoton Field by the Kansas Corporation
Commission (KCC). Gas production declined modestly in this field during 1995
and is expected to continue to decline.
Anadarko has made a number of successful property acquisitions in southwest
Kansas, expanding its inventory of properties that can be developed using
recompletions, increased density and step-out development drilling. One example
of this type of investment activity is the Angman Field, located in Seward
County, Kansas, a Field acquired in 1993.
Over the last two years, Anadarko has been developing deeper oil reserves in
the Angman Field. In 1993, the Field had only one well producing about 650
thousand cubic feet per day (Mcf/d) of gas. Since 1993, production from the
Angman Field has increased to 1,000 BOPD and 3,000 Mcf/d of gas after
<PAGE> 13
Page 13
drilling 13 development wells in the Chester and St. Louis zones. In 1996, the
Company plans to drill six wells north of Angman on new acreage acquired in
1995.
GAS GATHERING OPERATIONS Anadarko views gathering as one of the most important
methods of managing production volumes, improving reserve recovery and
efficiently depleting reservoirs. Since 1988, the Company has invested about
$76 million on gathering systems which are located in all of the strategic
producing areas. In late 1994, Anadarko agreed to purchase two separate gas
gathering systems in southwest Kansas - the Cimarron River System (CRS) and a
portion of the Panhandle Eastern Pipe Line (PEPL) gathering system.
In October 1994, the Company took over operation of the CRS. In December 1995,
the Federal Energy Regulatory Commission (FERC) issued orders approving
Anadarko Gathering Company's (a wholly-owned subsidiary of Anadarko)
acquisition of the PEPL assets and declaring that the assets will not be
subject to FERC jurisdiction. Anadarko took over operation of the PEPL assets
in March 1996. Approximately 75 percent of the gas flowing through these
systems is produced by Anadarko-operated wells.
Combined, these acquisitions will triple the Company's gas gathering capacity,
boosting capability to more than 480 MMcf/d. In 1996, Anadarko plans to invest
$15 million installing five compression stations to lower line pressure and
increase deliverability. This is the first stage of a three-year program to
improve operating efficiency.
*********************
* *
* TEXAS PANHANDLE *
* *
*********************
The West Panhandle Red Cave Field in Moore County, Texas is one of the
Company's onshore successes of 1995. Over the past year, Anadarko has drilled
20 wells, 16 of which produced a combined initial rate of 8.5 MMcf/d of gas
(net). Prior to the 1995 drilling program, Anadarko operated 34 Red Cave wells
with average production of about 2.5 MMcf/d of gas (net). Anadarko has been
active in the Red Cave Field since the 1960s. The shallow Red Cave wells can be
drilled, completed and connected to existing pipelines in about two weeks.
Additional drilling is planned in 1996.
<PAGE> 14
Page 14
*******************
* *
* PERMIAN BASIN *
* *
*******************
Anadarko's net oil production from west Texas' Permian Basin in 1995 increased
for the seventh consecutive year to an average of 11,500 BOPD, a seven-fold
increase since 1988. This increase can be attributed to successful acquisitions
and the exploitation of undeveloped properties. About half of the Company's
total oil production comes from the Permian Basin.
This area is an excellent example of how Anadarko uses acquisitions,
divestitures and property trades to strengthen its position and improve
profitability in core operating areas.
Capital expenditures in 1995 in the Permian Basin totaled about $27 million.
About $11 million was spent drilling 63 primary development wells, with the
remainder spent on 33 secondary recovery wells and associated waterflood
facilities. The Company has focused much of its recent acquisition efforts in
this area, acquiring properties that complement ongoing operations and have the
potential for increased production and reserves through improved waterflood
operations and development drilling. Properties that were acquired from ARCO in
1992 are still the focus of these activities.
One such example is the Ketchum Mountain Field, located in Irion County, Texas.
When acquired in 1992, this Field was producing 450 BOPD. The Company drilled
and completed 51 extension wells in 1995 and production is currently 2,000
BOPD. Anadarko is continuing development and plans to implement waterflood
operations in 1996.
In Ector County, Texas' Goldsmith Cummins Deep Unit, the Company drilled 25
wells and installed injection facilities in 1995 to further expand waterflood
operations. Current production from these properties is about 1,000 BOPD and
should increase over the next several years.
In 1996, Anadarko expects to invest about $30 million to further develop its
properties in the Permian Basin. An area of concentration will be the
Anadarko-operated TXL (South) and TXL (North) Units of Ector County, Texas,
where the Company's interests have recently been consolidated and increased
through a series of acquisitions and trades.
<PAGE> 15
Page 15
******************
* *
* GOLDEN TREND *
* *
******************
In 1995, Anadarko drilled eight wells in the Golden Trend of Central Oklahoma.
Activity in 1994 reached record levels with the drilling of 44 wells to develop
formations sandwiched between zones producing since the 1950s. However,
activity levels declined in 1995, due to weak gas prices. Plunger lift gas
systems were installed on 40 wells during the year, increasing their production
from 3.4 MMcf/d in 1994 to 4.4 MMcf/d of gas and decreasing their operating
expense.
Total production from the Golden Trend in 1995 averaged 19.1 MMcf/d (net) of
gas, a decrease of 17 percent compared to 1994. Oil production in 1995 averaged
560 BOPD (net), down 20 percent.
The Company plans to drill 10 wells in the Golden Trend in 1996 to extend
existing reservoir limits and improve production. Anadarko owns interests in
245 wells in the area, of which 166 are Company-operated. With more than
18,500 undeveloped lease acres in three counties, this area holds additional
future development opportunities for Anadarko. The Company will increase
drilling activities in the area as gas prices warrant.
****************
* *
* GULF COAST *
* *
****************
Anadarko continues to explore along the Gulf Coast in several high-potential,
relatively under-explored plays from South Texas through Louisiana and into
Mississippi. Future drilling is dependent upon the results of several large 3-D
seismic programs ongoing in Texas and Mississippi. These seismic programs
should be completed by late 1996.
***************************************************************************
* *
* Forward Looking Statements This annual report 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 assurances, however, can be given that *
* its goals will be achieved. See Additional Factors Affecting *
* Business under Item 7 of the Form 10-K. *
* *
***************************************************************************
STOCKHOLDERS' INFORMATION
The common stock of Anadarko Petroleum Corporation is traded on the New York
Stock Exchange. Average daily trading volume was 288,000 shares in 1995,
326,000 shares in 1994 and 283,000 shares in 1993.
The ticker symbol for Anadarko is APC and daily stock reports published in
local newspapers carry trading summaries for the Company under the headings
ANADRK or ANADRKPETE.
The following shows information regarding the closing market price of and
dividends paid on the Company's common stock by quarter for 1995 and 1994.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
1995
Market Price
High $45.38 $46.50 $50.25 $54.13
Low $35.88 $40.13 $41.25 $40.75
Dividends $0.075 $0.075 $0.075 $0.075
1994
Market Price
High $49.88 $58.00 $56.88 $49.38
Low $42.50 $46.00 $43.75 $37.38
Dividends $0.075 $0.075 $0.075 $0.075
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Anadarko Petroleum Corporation:
We consent to the incorporation by reference in the following registration
statements of Anadarko Petroleum Corporation of our report dated February 1,
1996, relating to the consolidated balance sheets of Anadarko Petroleum
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, which
report appears in the December 31, 1995 annual report on Form 10-K of Anadarko
Petroleum Corporation. Such report on the consolidated financial statements
refers to changes in the Company's method of accounting for income taxes and
postretirement benefits other than pensions.
(a) Post-Effective Amendment No. 1 to Forms S-8 and S-3, Anadarko
Petroleum Corporation 1986 Stock Option Plan (No. 33-8496).
(b) Post-Effective Amendment No. 2 to Forms S-8 and S-3, Anadarko Employee
Savings Plan (No. 33-8643).
(c) Post-Effective Amendment No. 1 to Forms S-8 and S-3, Anadarko
Petroleum Corporation 1987 Stock Option Plan (No. 33-22134).
(d) Forms S-8 and S-3, Anadarko Petroleum Corporation 1988 Stock Option
Plan for Non-Employee Directors (No. 33-30384).
(e) Amendment No. 1 to Form S-3, Anadarko Petroleum Corporation Shelf
Registration Statement for $300 million of Equity or Debt Securities
(No. 33-50717).
(f) Form S-8, Anadarko Petroleum Corporation 1993 Stock Incentive Plan
(No. 33-54485).
[KPMG PEAT MARWICK LLP]
Houston, Texas
March 7, 1996
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Officer and/or
Director of ANADARKO PETROLEUM CORPORATION (the "Company"), a Delaware
corporation, does hereby constitute and appoint SUZANNE SUTER and MICHAEL E.
ROSE, and each of them, his true and lawful attorney and agent to do any and
all acts and things and execute any and all instruments which, with the advice
of Counsel, said attorney and agent may deem necessary or advisable to enable
the Company to comply with the Securities Act of 1934, as amended, and any
rules, regulations and requirements of the Securities and Exchange commission
in connection with the filing under said Act of the Form 10-K Annual Report,
including specifically, but without limitation thereof, to sign his name as an
Officer and/or Director of the Company to the Form 10-K Annual Report filed
with the Securities and Exchange Commission, and to any instrument or document
filed as a part of, or in connection with, said Form 10-K Annual Report or
amendment thereto; and the undersigned does hereby ratify and confirm all that
said attorney and agent shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents
this 1st day of February, 1996.
<TABLE>
<S> <C>
[ROBERT J. ALLISON, JR.] [JAMES L. BRYAN]
- ------------------------------ -------------------------------
Robert J. Allison, Jr. James L. Bryan
[CONRAD P. ALBERT] [JOHN R.GORDON]
- ------------------------------ -------------------------------
Conrad P. Albert John R. Gordon
[LARRY BARCUS] [CHARLES M. SIMMONS]
- ------------------------------ -------------------------------
Larry Barcus Charles M. Simmons
[RONALD BROWN] [MICHAEL E. ROSE]
- ------------------------------ -------------------------------
Ronald Brown Michael E. Rose
[J. R. LARSON] [SUZANNE SUTER]
- ------------------------------ -------------------------------
J. R. Larson Suzanne Suter
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,090
<SECURITIES> 0
<RECEIVABLES> 127,943
<ALLOWANCES> 0
<INVENTORY> 14,859
<CURRENT-ASSETS> 163,198
<PP&E> 3,717,672
<DEPRECIATION> 1,628,922
<TOTAL-ASSETS> 2,267,047
<CURRENT-LIABILITIES> 190,473
<BONDS> 674,008
<COMMON> 6,047
0
0
<OTHER-SE> 903,647
<TOTAL-LIABILITY-AND-EQUITY> 2,267,047
<SALES> 434,014
<TOTAL-REVENUES> 434,014
<CGS> 307,463
<TOTAL-COSTS> 307,463
<OTHER-EXPENSES> 2,600
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<INTEREST-EXPENSE> 36,358
<INCOME-PRETAX> 29,266
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<INCOME-CONTINUING> 21,035
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<EPS-PRIMARY> .36
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