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Form 8-K ANADARKO PETROLEUM CORP For: Mar 03

March 3, 2015 9:11 AM EST


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

Date of Report (Date of earliest event reported): March 3, 2015

 
ANADARKO PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
 
1-8968
 
76-0146568
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)


1201 Lake Robbins Drive
The Woodlands, Texas 77380-1046
(Address of principal executive offices)

Registrant's telephone number, including area code (832) 636-1000
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 7.01  Regulation FD Disclosure.

On March 3, 2015, Anadarko Petroleum Corporation (Anadarko) announced its 2015 capital budget and provided guidance for 2015. The press release is included in this report as Exhibit 99 and is incorporated herein by reference. This information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01  Financial Statements and Exhibits.
(d)

Exhibits.
99

Anadarko Press Release dated March 3, 2015.





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 hereunto duly authorized.

 
 
ANADARKO PETROLEUM CORPORATION
 
 
(Registrant)
 
 
 
March 3, 2015
By:
/s/ M. CATHY DOUGLAS
 
 
M. Cathy Douglas
 
 
Senior Vice President, Chief Accounting Officer and Controller





EXHIBIT INDEX
 
Exhibit No.
 
Description
 
 
 
99
 
Anadarko Press Release dated March 3, 2015.




Exhibit 99


NEWS
ANADARKO ANNOUNCES 2015 CAPITAL PROGRAM AND GUIDANCE

HOUSTON, March 3, 2015 - Anadarko Petroleum Corporation (NYSE: APC) today announced its 2015 initial capital expectations and guidance, concurrent with its 2015 Investor Conference Call.

2015 INVESTOR CONFERENCE CALL HIGHLIGHTS
Anticipates approximately 5-percent year-over-year oil sales-volume growth in 2015, on a divestiture-adjusted basis(1) 
Forecasts improved 2015 liquids product mix of approximately 50 percent, even with the reduction of more than 9 million net barrels of oil equivalent (BOE) of assumed ethane rejection
Establishes net resources of more than 1 billion BOE in the Wolfcamp Shale
Achieves first oil at the 80,000-barrels-of-oil-per-day Lucius spar and enhances value through new production-handling agreement
Announces more than $700 million of asset monetizations to date in 2015

“During 2015, we are confident in our ability to leverage our deep, high-quality portfolio of opportunities, strong balance sheet and efficient capital allocation to preserve value and maintain flexibility,” said Anadarko Chairman, President and CEO Al Walker. “Few companies have accomplished operationally what Anadarko has achieved over the last five years; although, in the current market, we believe it is prudent to reduce capital investments and position the company for the future, rather than to pursue year-over-year growth. As a result, we’ve reduced our initial 2015 capital expectations by approximately 33 percent relative to last year, with plans to reduce our short-cycle U.S. onshore rig activity by 40 percent and defer approximately 125 onshore well completions. We have successfully delivered value during previous challenging commodity-price cycles, and I believe we have the skills, financial capacity and portfolio to deliver in this environment. Our focus continues to be on getting better, not necessarily bigger, while ensuring we are well positioned to accelerate activity as costs become more aligned with commodity prices and returns improve.”





2



2015 INITIAL SALES-VOLUME AND CAPITAL EXPECTATIONS

Divestiture-Adjusted1 Sales-Volume Expectations
2014
2015 Productive Capacity2
2015 Initial Expectations
 
 
 
301 MMBOE
308 - 314 MMBOE
295 - 301 MMBOE
 
 
 
(1) “Divestiture-Adjusted” sales volumes reflect Anadarko’s continuing asset base, giving effect to recent divestitures. For a reconciliation, see the table on page eight attached to this release.
(2) “Productive Capacity” is intended to represent what the portfolio could produce within the current 2015 capital budget range if the company did not elect to reject approximately 9 million BOE of ethane and choose to defer approximately 4 million BOE related to reduced U.S. onshore well completions.

Initial Capital Expectations ($5.4 - $5.8 Billion)*
By Cash Cycle
 
By Area
 
 
 
 
 
Short Cash Cycle
55
%
 
U.S. Onshore
60
%
Mid Cash Cycle
30
%
 
Int’l & Deepwater Operations
22
%
Long Cash Cycle
12
%
 
Int’l & Deepwater Exploration
10
%
Corporate
3
%
 
Midstream & Other
8
%
 
* Does not include capital investments by Western Gas Partners, LP (NYSE: WES); all percentages are approximates.

SHORT CASH CYCLE
Anadarko’s Wattenberg Horizontal program continues to generate some of the strongest U.S. onshore returns in the industry, primarily as a result of the company’s consolidated core acreage position, expansive infrastructure and minerals-interest ownership. The resilient economics of the Wattenberg field continue to make it an attractive place to invest in 2015 as it generates better than 30-percent before-tax rates of return at current strip prices. Additionally, the company plans to allocate capital toward its Eagleford Shale activity which, at current strip prices, generates before-tax rates of return of more than 20 percent.

MID CASH CYCLE
Anadarko remains committed to investing in assets that are expected to generate significant growth in the next one to three years. Among these assets is the Wolfcamp Shale in the Delaware Basin of West Texas, where the company is applying its proven integrated midstream approach to build the foundation for future growth. As a result of the company’s delineation activities to date, Anadarko has established a net resource




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estimate of more than 1 billion BOE with more than 5,000 identified drilling locations in the heart of the Wolfcamp Shale oil play. Additionally, Anadarko is leveraging its hub-and-spoke philosophy at its Lucius spar in the deepwater Gulf of Mexico by reaching a new production-handling agreement for the nearby third-party Buckskin/Moccasin project, while continuing to advance development of the Heidelberg and TEN mega projects in the Gulf of Mexico and offshore Ghana, respectively, toward first production in 2016.

LONG CASH CYCLE
In 2015, Anadarko expects to drill nine to 12 deepwater exploration/appraisal wells focusing on play-opening exploration opportunities in Colombia, Kenya and the Gulf of Mexico. Additionally, Anadarko continues to advance existing discoveries at Shenandoah in the Gulf of Mexico and Paon offshore Côte d’Ivoire toward commerciality, while continuing to progress its Mozambique LNG project.

Four pages of supplemental materials including the company’s 2015 initial guidance, updated hedging positions and a reconciliation of divestiture-adjusted sales volumes are provided in the tables attached to this release.

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2014, the company had approximately 2.86 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko and APC Flash Feed updates, please visit www.anadarko.com.

This news 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 assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including Anadarko’s ability to meet financial and operating guidance; to meet the objectives identified in this news release; to consummate the transaction described in this news release; to execute the 2015 capital program; to drill, develop and commercially operate the drilling prospects identified in this news release; to achieve production and budget expectations on its mega projects; and to successfully plan, secure necessary government approvals, finance, build and operate the necessary structure and an LNG park. See “Risk Factors” in the company’s 2014 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.





4



Cautionary Note to Investors: The United States Securities and Exchange Commission (“SEC”) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC’s definitions for such terms. Anadarko uses certain terms in this news release, such as “net resources,” “net resource estimate,” and similar terms that the SEC’s guidelines strictly prohibit Anadarko from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in Anadarko’s Form 10-K for the year ended Dec. 31, 2014, File No. 001-08968, available from Anadarko at www.anadarko.com or by writing Anadarko at: Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380, Attn: Investor Relations. This form may also be obtained by contacting the SEC at 1-800-SEC-0330.

#            #            #

ANADARKO CONTACTS

MEDIA:
John Christiansen, [email protected], 832.636.8736
Stephanie Moreland, [email protected], 832.636.2912
Christina Ramirez, [email protected], 832.636.8687

INVESTORS:
John Colglazier, [email protected], 832.636.2306
Robin Fielder, [email protected], 832.636.1462
Jeremy Smith, [email protected], 832.636.1544





5



Anadarko Petroleum Corporation
Financial and Operating External Guidance
March 3, 2015
 
 
 
 
 
 
 
1st-Qtr
 
Full-Year
 
 
Guidance
 
Guidance
 
 
 
 
 
 
 
 
 
 
 
 Units
 
 Units
 
 
 
 
 
 
 
 
 
Total Sales Volumes (MMBOE)
 
79


82

 
295


301

Total Sales Volumes (MBOE/d)
 
878


907

 
808


826

 
 
 
 
 
 
 
 
 
Crude Oil (MBbl/d)
 
300


308

 
285


293

 
 
 
 
 
 
 
 
 
United States
 
206


210

 
200


204

Algeria
 
66


68

 
63


65

Ghana
 
28


30

 
22


24

 
 
 
 
 
 
 
 
 
Natural Gas (MMcf/d)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
2,675


2,725

 
2,425


2,475

 
 
 
 
 
 
 
 
 
Natural Gas Liquids (MBbl/d)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
125


135

 
109


117

Algeria
 
6


8

 
4


6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $ / Unit
 
 $ / Unit
Price Differentials vs. NYMEX (w/o hedges)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crude Oil ($/Bbl)
 
(3.00
)

(1.00
)
 
(3.00
)

(1.00
)
 
 
 
 
 
 
 
 
 
United States
 
(6.00
)

(1.00
)
 
(6.00
)

(1.00
)
Algeria
 
2.00


5.00

 
2.00


5.00

Ghana
 


2.00

 


3.00

 
 
 
 
 
 
 
 
 
Natural Gas ($/Mcf)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
(0.50
)

(0.25
)
 
(0.60
)

(0.30
)
 
 
 
 
 
 
 
 
 




6



Anadarko Petroleum Corporation
Financial and Operating External Guidance
March 3, 2015
 
 
 
 
 
 
 
1st-Qtr
 
Full-Year
 
 
Guidance
 
Guidance
 
 
 
 
 
 
 
 
 
 
 
 $ MM
 
 $ MM
Other Revenues
 
 
 
 
 
 
 
 
Marketing and Gathering Margin
 
30


50

 
140


160

Minerals and Other
 
85


95

 
310


330

 
 
 
 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 $ / BOE
 
 $ / BOE
Oil & Gas Direct Operating
 
3.80


4.00

 
3.60


4.00

Oil & Gas Transportation/Other
 
3.50


3.70

 
3.70


3.90

Depreciation, Depletion and Amortization
 
14.50


15.00

 
15.25


15.75

Production Taxes (% of Product Revenue)
 
8.0
%

9.0
%
 
8.5
%

9.5
%
 
 
 
 
 
 
 
 
 
 
 
 $ MM
 
 $ MM
 
 
 
 
 
 
 
 
 
General and Administrative
 
310


330

 
1,250


1,300

Exploration Expense
 
 
 
 
 
 
 
 
Non-Cash
 
80


100

 
550


600

Cash
 
75


95

 
375


400

Interest Expense (net)
 
205


215

 
800


820

Other (Income) Expense
 
40


50

 
150


200

 
 
 
 
 
 
 
 
 
Taxes
 
 
 
 
 
 
 
 
Algeria (All current)
 
55
%

60
%
 
55
%

60
%
Rest of Company (Expect significant current-tax benefit)
 
10
%

15
%
 
25
%

30
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Avg. Shares Outstanding (MM)
 
 
 
 
 
 
 
 
Basic
 
507


508

 
508


509

Diluted
 
509


510

 
510


511

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Investment (Excluding Western Gas Partners, LP)
 $ MM
 
 $ MM
 
 
 
 
 
 
 
 
 
APC Capital Expenditures
 
1,700


1,900

 
5,400


5,800





7



Anadarko Petroleum Corporation
Commodity Hedge Positions (Excluding Natural Gas Basis)
As of March 3, 2015
 
 
 
 
 
 
 
 
 
Volume
 
Weighted Average Price per MMBtu
 
 
 
(Thousand
 
 
 
 
 
 
 
 
 
MMBtu/d)
 
Floor Sold
 
Floor Purchased
 
Ceiling Sold
Natural Gas
 
 
 
 
 
 
 
 
Three-Way Collars
 
 
 
 
 
 
 
2015
 
 
635
$
2.75
$
3.75
$
4.76
 
 
 
 
 
 
 
 
 
 
Extendable Fixed Price -
Financial
 
 
 
 
 
 
 
2015*
 
170
$
4.17
 
 
 
 
__________________________________________________________________
*
Includes an option for the counterparty to extend the contract term to December 2016 at the same price.

 
 
 
 
 
 
 
 
Interest-Rate Derivatives
As of March 3, 2015
 
 
 
 
 
 
 
 
 
Instrument
Notional Amt.
Start Date
Maturity
Rate Paid
Rate Received
 
 
Swap
$50 Million
Sept. 2016
Sept. 2026
5.91%
3M LIBOR
 
 
Swap
$1,850 Million
Sept. 2016
Sept. 2046
6.05%
3M LIBOR
 
 
 
 
 
 
 
 
 





8



Anadarko Petroleum Corporation
Reconciliation of Divestiture-Adjusted Sales Volumes
 
 
 
 
 
 
 
 
Average Daily Sales Volumes
 
 
 
Crude Oil &
 
 
 
 
 
Natural Gas
 
Condensate
 
NGLs
 
Total
 
MMcf/d
 
MBbls/d
 
MBbls/d
 
MBOE/d
Quarter Ended March 31, 2014
 
 
 
 
 
 
 
U.S. Onshore
2,396

 
112

 
92

 
604

Deepwater Gulf of Mexico
275

 
46

 
6

 
98

International and Alaska

 
87

 

 
87

Divestiture-Adjusted Sales
2,671

 
245

 
98

 
789

China, Pinedale/Jonah and EOR
26

 
25

 
1

 
30

Total
2,697

 
270

 
99

 
819

 
 
 
 
 
 
 
 
Quarter Ended June 30, 2014
 
 
 
 
 
 
 
U.S. Onshore
2,443

 
134

 
113

 
655

Deepwater Gulf of Mexico
176

 
41

 
6

 
76

International and Alaska

 
101

 
1

 
102

Divestiture-Adjusted Sales
2,619

 
276

 
120

 
833

China, Pinedale/Jonah and EOR
1

 
15

 

 
15

Total
2,620

 
291

 
120

 
848

 
 
 
 
 
 
 
 
Quarter Ended Sept. 30, 2014
 
 
 
 
 
 
 
U.S. Onshore
2,339

 
145

 
124

 
659

Deepwater Gulf of Mexico
154

 
46

 
5

 
77

International and Alaska

 
98

 
1

 
99

Divestiture-Adjusted Sales
2,493

 
289

 
130

 
835

China, Pinedale/Jonah and EOR
1

 
14

 

 
14

Total
2,494

 
303

 
130

 
849

 
 
 
 
 
 
 
 
Quarter Ended Dec. 31, 2014
 
 
 
 
 
 
 
U.S. Onshore
2,369

 
151

 
113

 
659

Deepwater Gulf of Mexico
179

 
47

 
6

 
83

International and Alaska

 
88

 
10

 
98

Divestiture-Adjusted Sales
2,548

 
286

 
129

 
840

China, Pinedale/Jonah and EOR
1

 
14

 

 
14

Total
2,549

 
300

 
129

 
854

 
 
 
 
 
 
 
 
Year Ended Dec. 31, 2014
 
 
 
 
 
 
 
U.S. Onshore
2,386

 
136

 
111

 
644

Deepwater Gulf of Mexico
196

 
45

 
5

 
83

International and Alaska

 
94

 
3

 
97

Divestiture-Adjusted Sales
2,582

 
275

 
119

 
824

China, Pinedale/Jonah and EOR
7

 
17

 

 
19

Total
2,589

 
292

 
119

 
843

Note: EOR transaction pending




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