Monday, July 25, 2011
Anadarko Petroleum Corp.
Anadarko announced second-quarter 2011 net income attributable to common stockholders of $544 million, or $1.08 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items decreased net income by approximately $28 million, or $0.06 per share (diluted) on an after-tax basis. Cash flow from operating activities in the second quarter of 2011 was $1.837 billion, and discretionary cash flow totaled $1.838 billion.
Second-Quarter 2011 Highlights
- Achieved record liquids sales volumes of 297,000 barrels per day
- Finalized Lucius unitization agreement
- Successfully tested three wells at the Caesar/Tonga mega project
- Closed the acquisition of the Wattenberg Processing Plant
"We achieved record liquids sales volumes during the quarter, enhancing margins and generating excellent cash flows," said Anadarko Chairman and CEO Jim Hackett. "Nearly all of the year-over-year volume growth was attributable to a 34,000 barrel-per-day increase in liquids volumes. These results contributed to strong discretionary cash flows of more than $1.8 billion -- approximately $117 million above our capital expenditures, which included a one-time cash investment of $518 million associated with the acquisition of the Wattenberg plant."
During the second quarter of 2011, sales volumes totaled 62 million barrels of oil equivalent (BOE), or 685,000 BOE per day, averaging approximately 2.3 billion cubic feet of natural gas per day, 225,000 barrels of oil per day (BOPD), and 72,000 barrels of natural gas liquids per day.
Operations Summary
The company achieved sales-volumes records during the second quarter of 2011 in Wattenberg, Greater Natural Buttes, Wamsutter (operated), Bone Spring and the Marcellus Shale. In the Eagleford Shale, Anadarko closed its $1.6 billion joint-venture agreement with a subsidiary of Korea National Oil Corporation and exited the quarter with record gross sales volumes of approximately 45,000 BOE per day in the play, an increase of approximately 25 percent from the end of the prior quarter. In Ghana, current gross production from Jubilee is approximately 80,000 BOPD, and production continues to ramp up with further well completions and gas injection.
In the deepwater Gulf of Mexico, Anadarko continued to advance two major projects during the second quarter. The company finalized the Lucius unitization agreement and recently announced plans to develop the field with a truss spar designed for a capacity of 80,000 BOPD and 450 million cubic feet of natural gas per day. Sanctioning is expected to occur later this year, with first production expected in 2014. At the Caesar/Tonga project, Anadarko completed flow and reservoir tests on three wells. Each of the wells tested at flow rates of approximately 15,000 BOPD with high-quality (27º API gravity) oil.
Exploration Summary
Anadarko has mobilized the Discoverer Spirit drillship to begin the company's 2011 exploration program in West Africa, following the drillship's completion of the final test at Caesar/Tonga. This program includes the Montserrado exploration well in Liberia, as well as the Jupiter exploration well and Mercury appraisal well in Sierra Leone. In other deepwater exploration areas, Anadarko continued to delineate its large natural gas discoveries in Mozambique, and to advance appraisal activities in the Tweneboa/Enyenra area offshore Ghana. The company also recently began appraisal drilling in the Campos Basin offshore Brazil.
As previously announced by Diamond Offshore, Anadarko signed long-term contracts in the second quarter for two new-build drillships. The Ocean BlackHawk is expected to be delivered in late 2013, and the Ocean BlackHornet is expected to be delivered in early 2014. These new state-of-the-art rigs are designed to work in up to 12,000 feet of water, and each has been contracted for a term of five years. These new rigs will feature enhanced drilling capabilities and safety equipment designed to meet the highest specifications in the industry.
"We expect the next six to nine months to be the most active period of deepwater exploration and appraisal drilling in our company's history," said Hackett. "Our exploration program is designed to deliver upon our goal of discovering more than 500 million BOE of net risked resources this year. We are continuing to advance our deep inventory of high-impact prospects, and the new rig agreements reinforce our long-term commitment to the safety and success of our global exploration program."
Financial Summary
Anadarko reported total product revenues of approximately $3.5 billion during the second quarter of 2011, a 46-percent increase relative to the second quarter of 2010. The company ended the second quarter of 2011 with approximately $3.4 billion of cash on hand in addition to its five-year, $5 billion undrawn credit facility. As provided in the supplemental information to this release, Anadarko protected an additional 450,000 MMBtu per day of 2013 natural gas production, with three-way collars that have a middle floor of $5.00 per MMBtu and a ceiling of $6.57 per MMBtu.
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