Anadarko Announces 2018 Fourth-Quarter And Full-Year Results

HOUSTON, Feb. 5, 2019 /PRNewswire/ -- Anadarko Petroleum Corporation (NYSE: APC) today announced 2018 fourth‑quarter results, reporting net income attributable to common stockholders of $102 million, or $0.21 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 $82 million, or $0.17 per share (diluted), on an after-tax basis.⁽¹⁾ Net cash provided by operating activities in the fourth quarter of 2018 was $1.6 billion.

For the year ended Dec. 31, 2018, Anadarko reported net income attributable to common stockholders of $615 million, or $1.20 per share (diluted). Full-year 2018 net cash provided by operating activities totaled $5.9 billion.

2018 HIGHLIGHTS

• Reached $3.75 billion of total share repurchases, representing 12 percent of shares outstanding
• Retired more than $600 million of debt during the year
• Increased the per-share dividend from 5 cents to 30 cents
• Announced Western Gas simplification transaction and $4 billion midstream asset sale
• Significantly expanded Delaware Basin oil, natural gas, and water infrastructure
• Positioned Mozambique LNG for expected sanctioning decision in the first half of 2019

"In 2018, we delivered on our commitment to increase the return of cash to investors through repurchasing stock, retiring debt and increasing our dividend," said Anadarko Chairman and CEO Al Walker. "As we look to 2019 and beyond, we remain focused on enhancing our capital efficiency by further improving our per-barrel margins and lowering our free cash flow breakeven oil price to continue meeting our cash-return objectives. We believe our portfolio and people give us an industry-leading ability to accomplish this while maintaining the financial flexibility to invest in our future as we anticipate progressing toward a final investment decision (FID) in the Mozambique LNG project in the first half of the year."

SALES VOLUME AND PROVED RESERVES
Anadarko's full-year sales volume of oil, natural gas and natural gas liquids (NGLs) totaled 243 million barrels of oil equivalent (BOE), or an average of 666,000 BOE per day. Fourth-quarter 2018 sales volume of oil, natural gas and NGLs averaged approximately 701,000 BOE per day.

In 2018, Anadarko organically added 284 million BOE of proved reserves before the effects of price revisions. Anadarko's costs incurred were $4.6 billion. The company's oil and natural gas exploration and development costs were $4.5 billion.⁽²⁾ The company estimates its proved reserves at year-end 2018 totaled 1.47 billion BOE, with 78 percent of its reserves categorized as proved developed. At year-end 2018, Anadarko's proved reserves were comprised of 63 percent liquids and 37 percent natural gas.

OPERATING HIGHLIGHTS
In West Texas, Anadarko's Delaware Basin oil sales volume averaged 75,000 barrels per day, with total volume averaging 127,000 BOE per day, in the fourth quarter of 2018. Much of the company's focus in 2018 in the Delaware Basin centered on expanding its extensive network of infrastructure to facilitate the company's transition to pad development. During the year, Anadarko successfully started up the Reeves and Loving Regional Oil Treating Facilities, which added 120,000 barrels per day of oil-processing capacity, and in the fourth quarter, Western Gas started up its first train at the Mentone gas-processing plant. These activities support Anadarko's Silvertip-A campaign, which is the company's first multi-well and multi-pad development with optimized infrastructure. In 2019, Anadarko expects to average approximately 10 operated rigs and five completion crews with plans to bring more than 150 operated wells to sales.

Anadarko's DJ Basin assets in Colorado averaged approximately 272,000 BOE per day during the fourth quarter of 2018, which included 102,000 barrels of oil per day. In 2019, the company expects to average four operated rigs and three completion crews while bringing more than 250 operated wells to sales.

In August 2018, Anadarko announced new details about its high-potential position in Wyoming's Powder River Basin. The company's core position includes approximately 300,000 gross acres with significant stacked-oil potential. Anadarko's 2019 activity in the Powder River Basin will focus on appraisal activity targeting the Turner formation, as the company expects to average one operated rig and completion crew and deliver more than 10 operated appraisal wells to sales.

Anadarko's Gulf of Mexico sales volume averaged 142,000 BOE per day in the fourth quarter of 2018, which included 120,000 barrels of oil per day. The company's leading infrastructure position continues to provide highly economic tieback opportunities, including new wells and developments at its 100-percent-owned Constitution, Horn Mountain, Holstein and Marlin platforms. This year, Anadarko plans to operate up to two drillships and two platform rigs and bring approximately 10 wells to sales in the areas near its Constellation, Holstein, Horn Mountain, K2, Lucius, and North Hadrian producing assets.

Anadarko's international sales volume averaged 102,000 barrels per day during the fourth quarter of 2018. The company also continued to make significant progress with its Mozambique LNG project, announcing Sale and Purchase Agreements (SPAs) with Tokyo Gas Co., Ltd; Centrica LNG Company Ltd., a subsidiary of Centrica plc; Shell International Trading Middle East Ltd; and CNOOC Gas and Power Singapore Trading & Marketing Pte. Ltd. These SPAs, coupled with the project's progress toward securing financing, and preparation of the onshore location for development, continue to position Anadarko to take FID during the first half of this year.

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

FINANCIAL HIGHLIGHTS
The company ended 2018 with $1.3 billion of cash. Since September 2017, Anadarko has announced equity-buyback and debt-reduction programs totaling $7 billion. The company repurchased $250 million of its common stock and retired $500 million of debt during the fourth quarter of 2018, bringing total share repurchases to $3.75 billion and total debt retirement to more than $600 million under these programs. During 2018, the company also increased its per-share dividend 500 percent, from 5 cents to 30 cents.

"We have returned tremendous value to our shareholders totaling more than $4.5 billion through share repurchases, dividend increases and debt reductions, and we expect to complete the remaining $1.25 billion of authorized share repurchases and $1.4 billion of debt reduction by mid-2020," said Walker. "While we expect market volatility to continue for some time, we are maintaining our previously announced capital expectations, which enable us to operate within anticipated discretionary cash flow at $50 oil and remain committed to our durable strategy of maximizing capital efficiency and enhancing returns on a multi-year basis."

2019 CAPITAL EXPECTATIONS AND SALES-VOLUME GUIDANCE
Anadarko's 2019 guidance remains the same as announced in November 2018. The company expects full-year capital investments in the range of $4.3 to $4.7 billion.⁽³⁾

CONFERENCE CALL TOMORROW AT 8 A.M. CST, 9 A.M. EST
Anadarko will host an investor conference call on Wednesday, Feb. 6, 2019, at 8 a.m. Central Standard Time (9 a.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2018 results as well as plans and expectations for 2019. The dial-in number is 877.883.0383 in the U.S. or 412.902.6506 internationally. The confirmation number is 7656732. 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
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.

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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 2018, the company had 1.47 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 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 improve margins and enhance returns; 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 and realize the expected benefits; to successfully complete the share-repurchase and debt-reduction programs; and to successfully plan, secure additional government and partner approvals, enter into long-term sales contracts, take FID and the timing thereof, 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

INVESTORS:
Mike Pearl, mike.pearl@anadarko.com, 832.636.3271
Andy Taylor, andy.taylor@anadarko.com, 832.636.3089
Jon VandenBrand, jon.vandenbrand@anadarko.com, 832.636.1007

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

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.

Anadarko Petroleum Corporation
Reconciliation of GAAP to Non-GAAP Measures

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.