Anadarko Announces Record Results
Anadarko Petroleum Corporation (NYSE: APC) reported record fourth-quarter and full-year 2005 net income and highlighted exploration and development results that are expected to contribute to future growth.
"The strength in oil and natural gas prices, along with operational improvements and an accretive share repurchase program, combined to make 2005 a very successful year," Anadarko Chairman, President and CEO Jim Hackett said.
FOURTH-QUARTER 2005 RESULTS
Fourth-quarter net income available to common shareholders was $874 million, or $3.73 per share (diluted), on revenues of $2.25 billion. Net income included costs associated with certain legal proceedings and international impairments amounting to $84 million after-tax, or 36 cents per share (diluted), partially offset by unrealized gains on commodity-related derivatives and gains from the company's firm transportation keep-whole agreement that totaled $50 million after-tax, or 21 cents per share (diluted). Net income for the fourth quarter of 2004 was $405 million, or $1.64 per share (diluted), on revenues of $1.62 billion. Fourth-quarter 2004 net income included international impairments, legal settlements and charges related to the refocused strategy, partially offset by unrealized gains on commodity-related derivatives and gains from the firm transportation keep-whole agreement, together totaling $71 million after taxes, or 29 cents per share (diluted).
Cash flow from operating activities was $1.27 billion in the fourth quarter, and discretionary cash flow totaled $1.59 billion.(1)
Sales volumes of natural gas, crude oil and natural gas liquids in the fourth quarter totaled 39 million barrels of oil equivalent (BOE), or 429,000 BOE per day. Natural gas sales volumes averaged 1,386 million cubic feet per day, at an average price of $9.94 per thousand cubic feet. Oil sales volumes in the fourth quarter averaged 164,000 barrels per day, with an average price of $52.16 per barrel. Natural gas liquids sales volumes averaged 34,000 barrels per day, at an average price of $39.16 per barrel.
Overall sales volumes were up slightly from the third quarter 2005, despite the continued temporary impact of hurricanes on significant Gulf of Mexico development projects, and were down year-over-year due to asset divestitures associated with Anadarko's 2004 refocused strategy.
"Anadarko's fourth-quarter performance was a strong finish to a watershed year," Hackett said. "Revenues set an all-time quarterly record, while at the same time we reduced direct operating costs 21 percent from the prior-year period. As a result, we were able to continue expanding our cash margins, partly because of higher commodity prices, but also due to a restructured, more efficient asset base."
In October, Anadarko completed a $2 billion stock repurchase program that began in June 2004. In November, the board of directors authorized a new $1 billion stock repurchase program, under which Anadarko bought back 2.7 million shares for $246 million by year-end. Since inception of these two programs, 31.1 million shares were purchased at an average cost of $72.33 per share (including all transaction costs), versus a year-end stock price of $94.75 per share.
FULL-YEAR 2005 RESULTS
Anadarko reported full-year 2005 net income available to common shareholders of $2.47 billion, or $10.39 per share (diluted), on revenues of $7.1 billion. Net income in 2004 was $1.6 billion, or $6.36 per share (diluted), on revenues of $6.08 billion.
Cash flow from operating activities totaled $4.15 billion in 2005. Discretionary cash flow totaled $4.42 billion.(1)
Sales volumes of natural gas, crude oil and natural gas liquids for 2005 totaled 158 million BOE, down from 2004 volumes of 190 million BOE due to asset divestitures. Adjusted for these property sales, volumes increased 5 percent in 2005 compared to the prior year.
"Our refocused strategy delivered good results in 2005, with record earnings and cash flows generated by a smaller asset portfolio," Hackett said. "Our $3.4 billion capital program funded exploration and development activity designed to provide volume growth for years to come. In addition to the capital program, we returned about $1.3 billion to stakeholders through share repurchases, dividends and debt reduction, and still ended the year with $739 million of cash. We entered 2006 with a diverse portfolio of opportunities and a strong, flexible balance sheet, with debt-less-cash-on-hand representing 21 percent of capitalization."
Anadarko added 291 million BOE of proved reserves, ending 2005 with a total of 2.45 billion BOE, up 6 percent from year-end 2004 excluding sales of reserves in place. This is the 24th consecutive year that Anadarko has more than replaced annual production with new proved reserves.
Reserve additions in 2005 came primarily from the deepwater Gulf of Mexico (including major existing development projects and the Cheyenne, Genghis Khan and Knotty Head discoveries) and fields in the North Louisiana Vernon, East Texas Bossier, West Texas Haley, Wyoming Salt Creek and Canadian Wild River areas.
Anadarko's year-end 2005 proved reserves remain nearly balanced between natural gas (54 percent, or 7.9 trillion cubic feet) and liquids (46 percent, or 1.1 billion barrels), which include crude oil, condensate and natural gas liquids.
"Anadarko's drilling program has continued to achieve organic
reserve replacement rates above its peers. In 2005, our reserve
additions significantly exceeded the reserves we produced," Hackett
said. "Our unconventional-resource focus onshore North America has
yielded solid, lower-risk and highly economic reserve additions, while
exploratory success in the deepwater Gulf of Mexico and new
initiatives underway internationally position us for continued reserve
growth in the future."
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