Anadarko Announces 2018 First-Quarter Results

HOUSTON, May 1, 2018 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced 2018 first‑quarter results, reporting net income attributable to common stockholders of $121 million, or $0.22 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 $158 million, or $0.30 per share (diluted), on an after-tax basis.⁽¹⁾ Net cash provided by operating activities in the first quarter of 2018 was $1.43 billion.

FIRST-QUARTER 2018 HIGHLIGHTS

• Achieved record divestiture-adjusted oil production of 367,000 barrels per day
• Increased the company's oil production mix to 57 percent, while generating its highest per-barrel margins since 2014, when oil prices averaged more than $93 per barrel for WTI
• Entered into accelerated share-repurchase agreements (ASRs) to complete the expanded $3.0 billion share-buyback program by the end of the second quarter, nine months from initial board authorization
• Secured substantial long-term oil transportation capacity from the Delaware Basin to both Gulf Coast and U.S. export markets, while also locking in firm sales out of the basin for about 80 percent of its operated natural gas production
• Received Mozambique government approval for the Golfinho/Atum Plan of Development for the company's LNG project with Area 1 participants

"The results we achieved over the second half of 2017 created strong momentum in the first quarter of 2018," said Al Walker, Anadarko Chairman, President and CEO. "Exceptional performance from our asset-management teams in the Delaware and DJ basins and the Deepwater Gulf of Mexico drove record quarterly oil production, matching the company's highest oil output to date. Additionally, we expect to complete our $3.0 billion share-repurchase program by mid-year and will consider expanding this program further should free cash flow from the current operating environment continue to increase.

"Looking ahead, our infrastructure buildout in West Texas is on track, with expectations of placing into service our first regional oil treating facility (ROTF) in Reeves County in the second quarter," added Walker. "This is expected to be followed by an additional ROTF in north Loving County and the first cryogenic train at the Mentone gas processing plant in the third quarter. As we have commented previously, these are key drivers for significant oil growth later this year and next. As the operator for approximately 70 percent of our Delaware Basin leasehold, we have significant size, scale, control and flexibility to be an anchor tenant on several pipeline projects to ensure hydrocarbon-takeaway from the basin and improve wellhead margins. Although we are increasing our expected capital investments by about $100 million for the full year, this is primarily a result of higher-than-expected non-operated plans in the Delaware Basin from our leasehold partners and does not represent an increase in operated activity. This durable strategy of providing capital-efficient growth, while generating free cash flow to drive the return of capital through share repurchases, increased dividends and debt retirement will continue to be one of our principal objectives in the years to come."

OPERATING HIGHLIGHTS
Anadarko's first-quarter sales volumes of oil, natural gas and natural gas liquids (NGLs) totaled 58 million barrels of oil equivalent (BOE), or an average of 643,000 BOE per day, which was at the high end of the company's first-quarter guidance.

In the Delaware Basin, the company's oil sales volumes averaged 52,000 barrels per day for the quarter, representing a 70-percent increase over the first quarter of 2017. Importantly, Anadarko secured substantial long-term oil transportation capacity with commitments covering more than half of the company's expected 2018 operated production and nearly all of its projected operated production by late 2019. The company will be an anchor shipper on Enterprise's Midland pipeline to Houston and Plains' Cactus II pipeline to Corpus Christi, and Anadarko is also covered by firm transport or firm sales with reliable counterparties controlling basin export capacity for approximately 80 percent of its operated natural gas production. In addition, construction on the Reeves ROTF is complete and commissioning activities are underway. Anadarko currently operates seven drilling rigs and five completion crews in the Delaware Basin.

In the DJ Basin of northeast Colorado, Anadarko continued to achieve record sales volumes, averaging more than 260,000 BOE per day, an 8-percent increase over the first quarter of 2017. The company currently operates four drilling rigs in the basin along with three completion crews that feature equipment with noise-reduction technology.

In the Deepwater Gulf of Mexico, Anadarko achieved record oil sales volumes of 128,000 barrels per day. Volume growth was driven by a new tieback at the Marlin facility and increased production at Horn Mountain, which is producing at its highest rate since 2006.

Sales volumes from Anadarko's international operations in Algeria and Ghana averaged 88,000 barrels of liquids per day during the first quarter of 2018. In March, the Mozambique Government approved the Anadarko-operated Area 1 Golfinho/Atum Plan of Development defining the integrated onshore LNG project from the reservoir to the market. The Mozambique LNG project also made good progress on marketing with the announcement of a long-term LNG Sale and Purchase Agreement (SPA) for 1.2 million tonnes per annum for a period of 15 years with one of the world's largest electric utilities, Électricité de France, S.A. (EDF). The near-term marketing objective has been met with non-binding key terms agreed with multiple buyers for more than 8.5 million tonnes per annum. Focus is now on converting these agreements to binding long-term SPAs.

OPERATIONS REPORT
For additional details on Anadarko's first-quarter 2018 operations and exploration program, please refer to the comprehensive Operations Report available at www.anadarko.com.

FINANCIAL HIGHLIGHTS
During the first quarter, Anadarko's capital investments, excluding Western Gas Partners, LP (WES), were $1.37 billion. The company also entered into two ASRs to complete its $3.0 billion share-repurchase program, which were funded by approximately $1.9 billion of cash on hand, with the final pricing and number of shares repurchased for the current outstanding ASR to be determined upon its completion in the second quarter. In the first quarter, Anadarko also announced a 400-percent increase to its quarterly dividend, increasing from 5 cents per share to 25 cents per share.

CONFERENCE CALL TOMORROW AT 8 A.M. CDT, 9 A.M. EDT
Anadarko will host an investor conference call on Wednesday, May 2, 2018, at 8 a.m. Central Daylight Time (9 a.m. Eastern Daylight Time) to discuss its first-quarter 2018 financial and operating results. The dial-in number is 877.883.0383 in the U.S. or 412.902.6506 internationally. The confirmation number is 2709670. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast, 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
Ten pages of summary financial data follow, including updated financial and production guidance, current hedge positions, and a reconciliation of "divestiture-adjusted" or "same-store" sales.

⁽¹⁾ See the accompanying table for details of certain items affecting comparability.

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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 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, infrastructure and drilling prospects identified 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 2017 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 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.