Q4 2016: Anadarko makes $515m loss

Anadarko Petroleum Corporation (NYSE: APC) has announced 2016 fourth-quarter results, reporting a net loss attributable to common stockholders of $515 million, or $0.94 per share (diluted).

These results include certain items typically excluded by the investment community in published estimates. In total, these items increased the net loss by $243 million, or $0.44 per share (diluted), on an after-tax basis.(1) Net cash provided by operating activities in the fourth quarter of 2016 was $1.12 billion.

For the year ended December 31, 2016, Anadarko reported a net loss attributable to common stockholders of $3.07 billion, or $5.90 per share (diluted). Full-year 2016 net cash provided by operating activities totaled $3.00 billion.

2016 HIGHLIGHTS

• Surpassed initial sales volume expectations by 11 million barrels of oil equivalent (BOE) on a same-store-sales basis,(2) while keeping capital investments within initial guidance



• Closed more than $4.0 billion of monetizations in 2016, with an additional $3.5 billion of announced divestitures, which are expected to close in the first quarter of 2017
• Achieved operating milestones including production records at Lucius, Caesar/Tonga and in the Delaware and DJ basins, as well as first oil at Heidelberg and TEN



• Closed the immediately accretive Freeport-McMoRan deepwater Gulf of Mexico acquisition



• Increased the expected five-year compounded annual oil growth rate to 12 to 14 percent

"Our employees did outstanding work over the past year to overcome the prolonged market challenges and sharpen the company's competitive focus going forward," said Al Walker, Anadarko Chairman, President and CEO. "As a result of these actions, we have a stronger balance sheet, an improved cost structure, and a more concentrated portfolio focused on higher-margin oil production provided by our leading positions in the Delaware and DJ basins and the deepwater Gulf of Mexico.

These accomplishments, along with our monetization activities, the cash-generating capabilities of our international operations, a successful exploration program, and the acquisition of Freeport-McMoRan's Gulf of Mexico properties, have created strong momentum going into 2017.

We are already increasing investments in our three 'Ds' to drive a five-year compounded annual oil growth rate of 12 to 14 percent, and I believe Anadarko is in a better position today to deliver value than at any time in my tenure with the company."

SALES VOLUMES AND PROVED RESERVES

Anadarko's full-year sales volumes of oil, natural gas and natural gas liquids (NGLs) totaled 290 million BOE, or an average of 793,000 BOE per day. Fourth-quarter 2016 sales volumes of oil, natural gas and NGLs averaged approximately 774,000 BOE per day.

In 2016, Anadarko organically added 300 million BOE of proved reserves before the effects of price revisions. Anadarko's costs incurred were $5.63 billion, which includes $2.45 billion of acquisition costs.

The company's oil and natural gas exploration and development costs were $3.21 billion.(3) The company estimates its proved reserves at year-end 2016 totaled 1.72 billion BOE, with 77 percent of its reserves categorized as proved developed. At year-end 2016, Anadarko's proved reserves were comprised of 57 percent liquids and 43 percent natural gas.

OPERATING HIGHLIGHTS

In 2016, Anadarko reduced its capital investments by approximately 50 percent relative to 2015, excluding capital investments associated with Western Gas Partners, LP (NYSE: WES), yet delivered significant sales-volume increases in its two most attractive U.S. onshore operating areas – the Delaware and DJ basins. Sales volumes in the Delaware Basin averaged approximately 45,000 BOE per day, including an increase of 8,000 barrels of oil per day (BOPD), representing a 50-percent increase over 2015.

In the DJ Basin, sales volumes averaged 244,000 BOE per day – a 20,000-BOE per day increase over 2015. The company increased rig activity in both basins during the year, ending 2016 with nine operated rigs in the Delaware Basin and five operated rigs in the DJ Basin, compared to six rigs in the Delaware and two in the DJ in the first quarter of 2016.

In December, Anadarko closed the acquisition of Freeport-McMoRan's deepwater Gulf of Mexico properties for $1.8 billion net of purchase-price adjustments, providing the company with the largest number of floating production facilities in the Gulf and doubling its net sales volumes from the region to more than 160,000 BOE per day. Also in the Gulf, the company announced exploration success at the Warrior prospect, which is a likely tie back to the company's Marco Polo facility.

Anadarko expects to spud an appraisal well to Warrior in the second quarter of 2017. Additionally, a successful appraisal well was drilled at the Phobos discovery, which is being evaluated as a possible tieback to Anadarko's Lucius facility.

Internationally, Anadarko's operations in Algeria continued to produce at their highest level since 2009, with gross production averaging 404,000 BOE per day during the fourth quarter. Meanwhile, the TEN project offshore Ghana, which achieved first oil in August, successfully ramped gross production to an average of approximately 54,000 BOPD in December.

FINANCIAL HIGHLIGHTS

Anadarko ended 2016 with $3.2 billion of cash on hand. During the year, the company generated $3.0 billion of net cash provided by operating activities and closed monetizations totaling more than $4.0 billion. Anadarko also has announced the divestitures of its Eagleford and Marcellus shale positions totaling more than $3.5 billion, which are expected to close during the first quarter of 2017.

During the fourth quarter, the company redeemed its remaining $750 million of 2017 debt maturities. Subsequent to year end, the company further strengthened its liquidity position by renewing its $2.0 billion, 364-day credit facility with a new maturity in 2018.