Anadarko Petroleum Corporation announced first-quarter 2007 net income available to common shareholders totaled $104 million, or $.23 per share (diluted), on revenues of $2.68 billion. Income from continuing operations totaled $78 million, or $.17 per share (diluted). These results include unrealized losses on derivatives of $316 million after tax, or $.68 per share (diluted); a $189 million charge, or $.41 per share (diluted) associated with Algeria's exceptional profits tax; a restructuring charge of $25 million after tax, or $.05 per share (diluted); and legal accruals totaling $22 million after tax, or $.05 per share (diluted); partially offset by realized gains on derivatives of $160 million after tax, or $.34 per share (diluted).
Cash flow from operating activities of continuing operations in the first quarter of 2007 was $880 million, and discretionary cash flow totaled $1.24 billion.
In the 2006 first quarter, net income available to common shareholders was $660 million, or $1.42 per share (diluted).
"While we recognized several significant charges in the first quarter, we also delivered very strong operating results, which reflect the quality of our optimized portfolio," Anadarko Chairman, President and CEO Jim Hackett said. "We continued to set daily production records in the Greater Natural Buttes area in eastern Utah, the Powder River Basin in Wyoming, and the Delaware Basin in Texas. Our positions in low-risk, capital-efficient properties such as these enhance our ability to deliver more predictable and consistent results. In addition, we are on schedule to produce first gas from the Independence Hub project in the third quarter of this year. Twelve Anadarko-operated wells will be served by the Hub. Each has been completed and flow-tested, and the export line has been installed and pressure tested."
"Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date. We have generated more than $10.2 billion in after-tax proceeds from announced asset divestitures, putting us well on our way toward meeting our objective to reduce net debt to $12 billion by year-end without issuing equity."
Late last week, senior management received information from Algeria that the withholding of the exceptional profits tax is being applied to the full value of revenue rather than to the amounts in excess of $30 per barrel, a possibility that was disclosed in a previous news release and Anadarko's 2006 10K. This has been evidenced by changes in the company's crude oil lifting schedule, which has only recently been conveyed by Sonatrach. As a result, Anadarko recorded a charge of $189 million during the first quarter. The amount applicable to 2007 sales is approximately $100 million, with the balance being applicable to 2006 sales. Anadarko previously expected to record a charge of $58 million in the first quarter, based on the tax being applied only to the amounts in excess of $30 per barrel. In 2006, Anadarko recorded $103 million for the tax.
"We are disappointed that the tax is being withheld by Algeria in this manner," said Hackett. "This interpretation of the tax does not affect our legal position or our expectation that we will retain the full value of our Algerian assets through our contractual remedies."
Anadarko intends to vigorously assert its rights and remedies under its contract with Sonatrach. However, the company has concluded that the accounting criteria for recognizing recovery of all or part of this cost under its contracts with Sonatrach are not yet met.
First-quarter sales volumes of natural gas, crude oil and natural gas liquids totaled 59 million barrels of oil equivalent (BOE), or 653,000 BOE per day. Natural gas sales volumes averaged 2.20 billion cubic feet per day, at an average price of $5.42 per thousand cubic feet. Oil sales volumes in the first quarter averaged 237,000 barrels per day, with an average price of $50.60 per barrel. Natural gas liquids sales volumes averaged 49,000 barrels per day, at an average price of $35.65 per barrel.
Anadarko will host a conference call on Tuesday, May 1, at 9 a.m. Central Daylight Time (10 a.m. Eastern Daylight Time) to discuss first-quarter results and the company's revised outlook for 2007. The dial-in number is 913-981-4900, and the confirmation number is 6428130. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.anadarko.com.
ANADARKO OPERATIONS REPORT
For more details on Anadarko's operations, please refer to the comprehensive report on first-quarter activity. The report will be available at www.anadarko.com on the Investor Relations page.
Nine pages of summary financial data follow, including current hedge positions, guidance and supplemental production guidance for the retained assets.
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 2006, the company had 3.0 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. In August 2006, Anadarko acquired Kerr-McGee Corporation and Western Gas Resources, Inc. in separate transactions.