Anadarko Announces 2017 Fourth-Quarter And Full-Year Results

HOUSTON, Feb. 6, 2018 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced 2017 fourth‑quarter results, reporting net income attributable to common stockholders of $976 million, or $1.80 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items increased net income by $870 million, or $1.62 per share (diluted), on an after-tax basis.⁽¹⁾ Net cash provided by operating activities in the fourth quarter of 2017 was $1.4 billion.

For the year ended Dec. 31, 2017, Anadarko reported a net loss attributable to common stockholders of $456 million, or $0.85 per share (diluted). Full-year 2017 net cash provided by operating activities totaled $4.0 billion.

2017 HIGHLIGHTS

• Further improved oil sales-volume product mix to 53 percent, with liquids increasing to 67 percent, contributing to a 67-percent improvement in margins per barrel⁽²⁾
• Achieved production exit rates totaling more than 150,000 barrels of oil per day (BOPD) combined from the Delaware and DJ basins
• Closed more than $4.0 billion of asset divestitures
• Announced $2.5 billion share repurchase program and, by year end, repurchased 21.9 million shares for approximately $1.1 billion (average price of $48.33 per share)
• Achieved completion of the Legal and Contractual Framework and commenced resettlement for the Mozambique LNG project

"Given the significant volatility the energy sector faced in 2017, we continued to focus on capital efficiency throughout the year by investing upstream capital within discretionary cash flow, while materially improving margins per barrel – an approach that produced very encouraging results as we concluded the year," said Al Walker, Anadarko Chairman, President and CEO. "These operational efficiencies, an improving market environment, and strong momentum provide an exciting backdrop to 2018. Our capital-investment program this year is well positioned to deliver attractive cash returns that produce healthy production growth. As we have stated previously, we will complement this capital-efficient investment plan with additional share buybacks, increases to our dividend yield, and improvements to our credit metrics, as market conditions permit, rather than materially increasing our capital expenditures to pursue greater production volume."

SALES VOLUMES AND PROVED RESERVES
Anadarko's full-year sales volumes of oil, natural gas and natural gas liquids (NGLs) totaled 245 million barrels of oil equivalent (BOE), or an average of 672,000 BOE per day. Fourth-quarter 2017 sales volumes of oil, natural gas and NGLs averaged approximately 637,000 BOE per day.

In 2017, Anadarko organically added 244 million BOE of proved reserves before the effects of price revisions. Anadarko's costs incurred were $4.1 billion. The company's oil and natural gas exploration and development costs were $4.2 billion.⁽²⁾ The company estimates its proved reserves at year-end 2017 totaled 1.44 billion BOE, with 78 percent of its reserves categorized as proved developed. At year-end 2017, Anadarko's proved reserves were comprised of 63 percent liquids and 37 percent natural gas.

OPERATING HIGHLIGHTS
By year-end 2017, oil sales volumes in the Delaware Basin of West Texas surpassed 50,000 BOPD, representing a 69-percent increase over the fourth quarter of 2016. The company also made significant progress toward full development mode as it successfully concluded its drilling program to capture 70‑percent operatorship across its 240,000-net-acre position.

In the DJ Basin of northeast Colorado, Anadarko achieved record sales volumes of more than 254,000 BOE per day. Oil sales volumes surpassed 100,000 BOPD in December, driving an increase of almost 20 percent over the previous quarter. In addition, the company's new completion design implemented in 2017 increased its estimated ultimate recovery (EUR) to 690,000 BOE per well in the contiguous core, representing an increase of more than 20-percent over the previous type curve.

Gulf of Mexico sales volumes averaged 143,000 BOE per day in the fourth quarter, representing a 35-percent increase over the fourth quarter of 2016. Oil sales volumes for the quarter averaged 120,000 BOPD, a 48-percent increase over the fourth quarter of 2016, while also reflecting the impact of Hurricane Nate and the prolonged shutdown at the third-party-operated Enchilada platform.

Anadarko's international and frontier operations averaged 94,000 barrels per day during the fourth quarter of 2017, representing an 18-percent decrease relative to the fourth quarter of 2016, which was largely driven by statutory maintenance on the El Merk facility in Algeria and the timing and size of tanker liftings. Additionally, during the fourth quarter, the company made meaningful progress with its Mozambique LNG project by beginning the resettlement process to prepare the onshore location for the future LNG park.

OPERATIONS REPORT
For additional details on Anadarko's fourth-quarter 2017 operations and exploration program, please refer to the comprehensive Operations Report available at www.anadarko.com.

FINANCIAL HIGHLIGHTS
During the year, Anadarko generated $4.0 billion of net cash provided by operating activities while investing $3.8 billion on upstream exploration and development activities.⁽³⁾ The company ended 2017 with $4.6 billion of cash on hand and closed asset divestitures totaling more than $4.0 billion during the year. Subsequent to year end, Anadarko divested its non-operated interest in its Alaska assets for approximately $400 million. The transaction is subject to regulatory approval.

During the fourth quarter, approximately $1.1 billion of the company's previously announced $2.5 billion share-repurchase program was executed under an accelerated share repurchase (ASR) agreement and through open-market purchases. In February 2018, Anadarko completed a repurchase of 8.5 million shares for $500 million (average price of $58.82 per share) under an additional ASR agreement. To date, the company has completed $1.6 billion of repurchases under the program, totaling 30.4 million shares at an average price of $51.27 per share.

Subsequent to year end, the company amended both its $3.0 billion, five-year credit facility to extend the maturity date to January 2022 and its $2.0 billion, 364-day credit facility to extend the maturity date to January 2019.

2018 CAPITAL PROGRAM AND SALES-VOLUME GUIDANCE
Anadarko's 2018 guidance has been adjusted from its November 2017 news release for the divestiture of its Alaska assets and anticipated production impacts related to non-operated downtime in the Gulf of Mexico. The company expects full-year capital investments in the range of $4.1 to $4.5 billion, not including capital investments made by Western Gas Partners, LP (NYSE: WES).

CONFERENCE CALL TOMORROW AT 8 A.M. CST, 9 A.M. EST
Anadarko will host an investor conference call on Wednesday, Feb. 7, 2018, at 8 a.m. Central Standard Time (9 a.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2017 results as well as details of the company's 2018 capital program and expectations. The dial-in number is 877.883.0383 in the U.S. or 412.902.6506 internationally. The confirmation number is 4262361. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast and slide presentation, please visit  www.anadarko.com. A replay of the call will be available on the website for approximately 30 days following the conference call.

FINANCIAL DATA
Twelve pages of summary financial data follow, including costs incurred, proved reserves, current hedge positions, a reconciliation of "divestiture-adjusted" or "same-store" sales, and updated financial and production guidance.

Logo - http://photos.prnewswire.com/prnh/20141103/156201LOGO

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 2017, the company had 1.44 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 realize its expectations regarding performance; to finalize year-end reserves; to successfully execute upon its capital program; to efficiently identify and deploy capital resources; to meet financial and operating guidance; to timely complete and commercially operate the projects and drilling prospects identified in this news release; to consummate the transaction described in this news release; to finalize the necessary steps to secure operatorship; to successfully complete the share repurchase program and to enter into additional programs; to increase the dividend; to reduce debt; and to successfully plan, secure additional government approvals, enter into long-term sales contracts, finance, build, and operate the necessary infrastructure and LNG park in Mozambique. See "Risk Factors" in the company's 2016 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.

Anadarko Contacts

MEDIA:
John Christiansen, john.christiansen@anadarko.com, 832.636.8736
Stephanie Moreland, stephanie.moreland@anadarko.com, 832.636.2912

INVESTORS:
Robin Fielder, robin.fielder@anadarko.com, 832.636.1462
Kate Sloan, kate.sloan@anadarko.com, 832.636.2562
Andy Taylor, andy.taylor@anadarko.com, 832.636.3089

Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures

Below are reconciliations of certain GAAP to non-GAAP financial measures, each as required under Regulation G of the Securities Exchange Act of 1934. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be comparable to similarly titled measures.

Management uses adjusted net income (loss) to evaluate operating and financial performance and believes the measure is useful to investors because it eliminates the impact of certain noncash and/or other items that management does not consider to be indicative of the Company's performance from period to period. Management also believes this non-GAAP measure is useful to investors to evaluate and compare the Company's operating and financial performance across periods, as well as facilitating comparisons to others in the Company's industry.

Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures

Management believes that the presentation of Adjusted EBITDAX (Margin) provides information useful in assessing the Company's operating and financial performance across periods.

Management believes oil and natural gas exploration and development costs is a more accurate reflection of the expenditures incurred during the current year excluding certain obligations to be paid in future periods.

Management uses net debt to determine the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt in the capitalization ratio is useful to investors in determining the Company's leverage since the Company could choose to use its cash and cash equivalents to retire debt. In addition, management believes that presenting Anadarko's net debt excluding WGP is useful because WGP is a separate public company with its own capital structure.