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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
AS OF APRIL 29, 1999
COMMISSION FILE NO. 1-8968
ANADARKO PETROLEUM CORPORATION
17001 NORTHCHASE DRIVE, HOUSTON, TEXAS 77060-2141
(281) 875-1101
Incorporated in the Employer Identification
State of Delaware No. 76-0146568
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ITEM 5. OTHER EVENTS
Anadarko Petroleum Corporation (NYSE: APC) today announced financial
and operating results for the first quarter of 1999.
For 1999's first quarter, Anadarko reported a net loss available to
common stockholders of $23.1 million, or 19 cents per share (diluted), on $136
million of revenues. The loss reflects a non-cash charge of $20 million before
taxes ($13.3 million after taxes) related to its remaining operations in Eritrea
as a result of drilling an unsuccessful exploration well. By comparison, during
the first quarter of 1998, Anadarko had net income of $7 million, or 6 cents per
share (diluted), on $147 million of revenues.
Excluding the foreign impairment, the company's net loss for the first
three months of 1999 was $9.8 million, or 8 cents per share (diluted). In
addition to the charge for Eritrea, the company attributed the decrease in
revenues and earnings during 1999's first quarter primarily to significantly
lower commodity prices, higher interest expense and preferred stock dividends.
Robert J. Allison, Jr., Chairman, President and CEO, said, "The loss in
the first quarter is mainly due to low prices -- but prices have begun to
recover. Since early March we've seen almost a 50% improvement in oil prices and
a 30% increase in gas prices. We can't change prices . . . that's the
macroenvironment in which we live. What we can do is distinguish ourselves from
our peers in the way that we deal with the adversity that low prices bring.
"We've concentrated capital spending on plays and projects -- in
Algeria, Alaska and the sub-salt trend in the Gulf of Mexico -- that add real
economic value for our stockholders. At the same time, we've taken steps to
conserve cash and cut costs. We are deferring some projects, especially in
southwest Kansas and west Texas, until our realized prices improve. These are
deferrals -- not lost opportunities."
1999 FIRST QUARTER PRODUCTION INCREASES
During the first quarter of 1999, Anadarko produced 12.9 million energy
equivalent barrels, up 14% from 11.3 million barrels in 1998's same period. The
increase was attributed primarily to oil production from the company's
operations in Algeria, which came onstream in May 1998.
Anadarko's production from its operations in Algeria averaged about
60,000 gross barrels of oil per day during 1999's first quarter. Under the
recent OPEC cutbacks, the
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company's Algerian production currently is averaging about 53,600 gross barrels
of oil per day. However, the increase in oil prices due to the OPEC cutbacks is
expected to have a positive impact on the company's revenues and earnings.
Anadarko's oil production for the first three months of 1999 rose 76%
to an average of 44,000 barrels per day, up from 25,000 barrels per day in
1998's corresponding period. The higher oil production volumes were offset by a
19% decline in 1999's first quarter oil prices. Anadarko's average oil price for
the first quarter of 1999 was $10.60 per barrel, off 19% from $13.02 per barrel
a year ago.
In 1999's first quarter, the company's natural gas production averaged
489 million cubic feet per day, level with the same period in 1998. Anadarko's
wellhead price for natural gas was $1.59 per thousand cubic feet (Mcf) for the
first quarter of 1999, off 21% from $2.02 per Mcf a year ago.
During the first three months of 1999, Anadarko's natural gas liquids
(NGLs) sales volumes averaged 18,000 barrels per day, a 4% decline compared to
19,000 barrels per day in 1998's first quarter. The company's average price for
NGLs was $8.60 per barrel in 1999's first quarter, 26% below an average price of
$11.68 per barrel a year ago.
Anadarko has maintained active exploration and development drilling
programs in the first quarter. About two-thirds of Anadarko's capital investment
program for 1999 will go to three large development projects that are expected
to provide substantial growth for the company over the next three years. The
three are:
* ALASKA -- On Alaska's North Slope, the production facility for the Alpine oil
field is now about 65% complete and drilling of the initial development wells
has begun. In addition, two exploration wells were drilled in early 1999 on
satellite prospects north of Alpine. However, the results have not yet been
disclosed by the operator. Alpine is scheduled to begin production at a rate of
40,000 gross barrels of oil per day in mid-2000. Anadarko has a 22% working
interest in Alpine. ARCO Alaska, Inc., as operator, holds the remaining 78%
working interest.
* ALGERIA -- Development plans are progressing for Anadarko's second major field
development project. Algeria's Council of Ministers approved the Exploitation
License decree for the Qoubba field (now called Ourhroud) in February 1999. The
company expects to invite bids for an engineering, procurement and construction
contract for the field during the second quarter of 1999. Construction
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of the production facility at Ourhroud is expected to get underway in 2000 with
first production anticipated in mid-2002, ramping up to about 230,000 gross
barrels of oil per day.
* GULF OF MEXICO -- Additional drilling continues at Anadarko's Tanzanite and
Hickory fields in the Gulf of Mexico's sub-salt play, where discoveries were
made in 1998. During 1999 and early 2000, Anadarko plans to continue development
of both fields with production expected to begin in the second half of 2000. The
company will also seek to leverage its technical advantage in the sub-salt play
into a stronger acreage position during 1999. For competitive reasons, the level
of details disclosed about the sub-salt program will be limited over the next
few months.
Comparative financial highlights follow (amounts in millions, except per share
data):
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31
----------------------
1999 1998
-------- ---------
<S> <C> <C>
Net income (loss)
available to common
stockholders $ (23.1)* $ 7.0
Earnings (loss) per
share - diluted $ (0.19)* $ 0.06
Revenues $ 136.4 $ 147.0
Average common shares
outstanding 120.5 119.8
</TABLE>
* Includes a non-cash charge of $20 million before taxes ($13.3 million after
taxes) related to the company's remaining operations in Eritrea. Excluding the
foreign impairment, the net loss was $9.8 million, or $0.08 per share (diluted).
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Anadarko believes that its expectations are based on
reasonable assumptions. No assurances, however, can be given that its goals will
be achieved. See Additional Factors Affecting Business in the Management's
Discussion and Analysis (MD&A) included in the Company's 1998 Annual Report on
Form 10-K.
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ANADARKO PETROLEUM CORPORATION
<TABLE>
<CAPTION>
QUARTER ENDED
SUMMARY FINANCIAL INFORMATION MARCH 31
-----------------------------
$ and shares in millions 1999 1998
============ ============
<S> <C> <C>
REVENUES
------------ ------------
Gas sales $ 77.8 $ 93.5
Oil and condensate sales 43.6 31.4
Natural gas liquids and other 15.0 22.1
------------ ------------
Total 136.4 147.0
============ ============
COSTS AND EXPENSES
------------ ------------
Operating expenses 34.1 40.3
Administrative and general 24.4 21.2
Depreciation, depletion and amortization 56.5 51.3
Other taxes 9.3 10.8
Impairments related to international properties 20.0 --
------------ ------------
Total 144.3 123.6
============ ============
Operating Income (Loss) (7.9) 23.4
INTEREST EXPENSE 18.6 12.4
============ ============
Income (Loss) before Income Taxes (26.5) 11.0
INCOME TAXES (6.1) 4.0
============ ============
NET INCOME (LOSS) $ (20.4) $ 7.0
============ ============
Preferred Stock Dividends 2.7 --
============ ============
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ (23.1) $ 7.0
============ ============
PER COMMON SHARE
------------ ------------
Net income (loss) - basic $ (0.19) $ 0.06
Net income (loss) - diluted $ (0.19) $ 0.06
Dividends $ 0.05 $ 0.0375
------------ ------------
AVERAGE NUMBER OF SHARES OUTSTANDING 120.5 119.8
============ ============
CASH FLOW FROM OPERATIONS BEFORE CHANGES IN ASSETS AND LIABILITIES
------------ ------------
Net income (loss) $ (20.4) $ 7.0
Depreciation, depletion and amortization 56.5 51.3
Amortization of restricted stock 0.3 0.3
Deferred U.S. income taxes (10.7) 4.0
Impairments related to international properties 20.0 --
------------ ------------
Total $ 45.7 $ 62.6
============ ============
CAPITAL EXPENDITURES
------------ ------------
Capital spending $ 84.3 $ 240.8
Capitalized interest 5.5 5.9
Capitalized overhead 22.0 21.4
------------ ------------
Total $ 111.8 $ 268.1
============ ============
CAPITALIZATION
------------ ------------
Long-term debt $ 1,560.8 $ 1,095.1
Stockholders' equity 1,234.5 1,122.7
------------ ------------
Total $ 2,795.3 $ 2,217.8
============ ============
CAPITALIZATION RATIOS
------------ ------------
Long-term debt 56% 49%
Stockholders' equity 44% 51%
------------ ------------
TOTAL ASSETS $ 3,657.8 $ 3,189.8
============ ============
</TABLE>
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<TABLE>
<CAPTION>
QUARTER ENDED
VOLUMES AND PRICES MARCH 31
---------------------------
1999 1998
============ ============
<S> <C> <C>
NATURAL GAS
------------ ------------
Volumes, billion cubic feet 44.0 44.0
Average daily volumes, million cubic feet per day 489 489
Price per thousand cubic feet $ 1.59 $ 2.02
------------ ------------
CRUDE OIL AND CONDENSATE
------------ ------------
Volumes, thousand barrels 3,968 2,251
Average daily volumes, thousand barrels per day 44 25
Price per barrel $ 10.60 $ 13.02
------------ ------------
NATURAL GAS LIQUIDS
------------ ------------
Volumes, thousand barrels 1,632 1,704
Average daily volumes, thousand barrels per day 18 19
Price per barrel $ 8.60 $ 11.68
------------ ------------
TOTAL ENERGY EQUIVALENT BARRELS
------------ ------------
Volumes, million EEBs 12.9 11.3
============ ============
</TABLE>
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED DULY AUTHORIZED OFFICER AND PRINCIPAL FINANCIAL OFFICER.
ANADARKO PETROLEUM CORPORATION
(REGISTRANT)
April 29, 1999 MICHAEL E. ROSE
------------------------------------------
Michael E. Rose - Senior Vice
President, Finance and Chief Financial
Officer
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