Anadarko Petroleum, despite losing 25 percent of its asset base last year to property sales, managed to boost revenues by 5 percent to $1.53 billion in the 2005 first quarter vs. the year-ago period, thanks to strong oil and gas prices and a new management plan.
Big exploration and production independents Kerr-McGee, Burlington Resources, Unocal, Noble Energy, Apache and Chesapeake Energy also galloped out of the 2005 first quarter with higher profits on exceptionally strong commodity prices.
Anadarko’s production after property sales in the recent quarter also rose an impressive 10 percent to 455,000 barrels of oil equivalent per day, but was still well below the 538,000 barrels per day produced a year ago prior to the company’s sale of non-core properties.
“Anadarko is a different company than we were this time a year ago,” Jim Hackett, Anadarko’s chief executive officer, said in an April 29 conference call with analysts. “Our asset sales and strategic realignment have us operating from a smaller, more efficient base, which is reflected in the results we achieved this quarter.”
Hackett said Anadarko’s unconventional onshore gas properties in the United States continue to be the company’s “biggest upward momentum.” He noted that the Haley tight gas play in West Texas has evolved into a strong performer, producing 115 million cubic feet of natural gas per day at the end of the 2005 first quarter, up from 85 million cubic feet a day at year-end 2004.
Anadarko profits up 30 percent
Anadarko’s profit in the 2005 first quarter came in at $490 million or $2.05 per share, up 30 percent compared to a profit of $392 million or $1.55 per share earned a year earlier.
The balance sheet also was buoyed by last year’s massive $2 billion stock buyback program that continued into the 2005 first quarter with the repurchase of 2.6 million shares of outstanding Anadarko common stock for about $200 million. In total, Anadarko has repurchased $1.5 billion in stock amounting to 22.8 million shares.
Anadarko also reduced its debt to a comfortable 29 percent of market capitalization and has nearly $1 billion in cash on hand. “Altogether, Anadarko delivered a 32 percent increase in diluted earnings per share on less than a 5 percent increase in revenues,” Hackett noted.
The company’s performance in the 2005 first quarter represents “a fresh carpet” and “a newly refocused Anadarko now that the transition is over,” Hackett said, adding that the company’s scaled down property portfolio demonstrates that it can produce strong production growth and cash margins, despite rising oilfield service costs.
However, the company is expecting a decline in production during the 2005 second quarter compared to the first quarter, primarily because of the timing of tanker loadings in Algeria and natural declines at its underperforming Marco Polo field in the deepwater Gulf of Mexico.
Daily production at the company’s Marco Polo field has plummeted to around 8,000 barrels of oil equivalent from a peak of about 42,000 barrels per day last October. The field has never performed as expected, leaving more than enough room in the offshore Marco Polo production facility to accommodate announced satellite discoveries K2, K2 North and Genghis Khan.
Kerr-McGee: higher profits, production
Meanwhile, Oklahoma’s Kerr-McGee weighed in with a 2005 first-quarter profit of $354.5 million or $2.20 per share, more than double the $152.2 million or $1.41 per share earned in the year-ago quarter.
The increase in net income was due to higher oil and natural gas sales prices, higher production volumes and improved chemical operating results. First-quarter revenues of $1.7 billion were up 55 percent from the prior-year period.
The higher production volumes were attributed primarily to Kerr-McGee’s acquisition of independent Westport Resources last June and the startup of production in China’s Bohai Bay and from the Red Hawk field in the deepwater Gulf of Mexico in last year’s third quarter.
Kerr-McGee’s daily oil production averaged 187,700 barrels in the 2005 first quarter, compared with 143,200 barrels in the 2004 period, an increase of 31 percent. Natural gas sales averaged 1.1 billion cubic feet per day for the 2005 first quarter, up 45 percent from the prior-year period.
The company’s total debt decreased by $642.9 million, from about $3.7 billion at year-end 2004 to about $3.1 billion at the end of the 2005 first quarter, according to Kerr-McGee.
Burlington: income up 33 percent
Big natural gas producer Burlington Resources reported 2005 first-quarter net income of $471 million or $1.21 per share, a 33 percent increase over the $354 million or 89 cents per share on a post-stock-split basis earned during the first quarter of 2004. The increase was attributed primarily to higher oil and prices.
Net cash provided by Burlington’s operating activities in the 2005 first quarter increased to a record $819 million from $742 million during the prior year’s quarter. Discretionary cash flow increased to $946 million, also a quarterly record, from $812 million during the prior year’s quarter.
“While the entire industry faces increasing cost pressures, we have some natural advantages and remain focused on conducting our programs efficiently and effectively,” said Bobby Shackouls, Burlington’s chief executive officer.
Burlington’s total production during the 2005 first quarter was reportedly stable at 2.846 billion cubic feet of natural gas equivalent per day, compared to 2.849 billion cubic feet in the year-ago quarter.
Unocal: record net income
Unocal, which is being acquired by major ChevronTexaco, posted record net income in the 2005 first quarter of $454 million or $1.66 per share, a healthy 69 percent over the $269 million or $1 per share reported in the same period last year. The company’s preliminary adjusted after-tax earnings for the first quarter of $441 million or $1.62 per share handily beat analysts’ estimates of $1.37 per share.
Unocal attributed the hefty increase in earnings to a combination of strong commodity prices, a 5 percent increase in worldwide oil and natural gas production over the past year and lower interest expense.
During the quarter, Unocal initiated production from the Mad Dog field in the deepwater Gulf of Mexico, Central Azeri in the Caspian Sea and Moulavi Bazar in Bangladesh. Looking forward, the company expects to launch oil production from Marco Polo satellite K2 in the U.S. Gulf and the Pattani oil development offshore Thailand.
Unocal’s worldwide hydrocarbon liquids and natural gas production for the first quarter 2005 averaged 429,000 barrels of oil equivalent per day, up from 409,000 barrels per day in the same period a year ago. The production increase was due primarily to higher liquids and natural gas production in Asia, according to Unocal.
Noble: income up 29 percent
Noble Energy reported first-quarter 2005 net income of $110.0 million or $1.86 per share, a respectable 29 percent increase compared to $85.5 million or $1.48 per share earned in last year’s first quarter. Discretionary cash flow was a record high $223.5 million in this year’s first quarter, a 9 percent increase vs. $204.9 million for the first quarter of 2004.
The company said its earnings estimates for the 2005 first quarter did not include the impact of Noble’s previously announced proposed merger with Patina Oil & Gas, nor do they include possible asset purchases or sales.
However, Noble’s production slipped during the 2005 first quarter, averaging 105,051 barrels of oil equivalent per day compared to 106,615 barrels per day for the first quarter of last year.
The decrease was largely blamed on Noble’s U.S. production, which was down from the year-ago period primarily because of natural decline on the U.S. Gulf’s continental shelf and facility damage in the Gulf caused by Hurricane Ivan during the third quarter of 2004. On a more positive note, the company’s international production increased 24 percent from year-ago levels.
Apache: record first-quarter earnings
Apache said higher oil and gas prices and strong production contributed to its record first-quarter 2005 earnings of $559 million or $1.67 per, up 62 percent from $345 million or $1.05 per share in the first quarter of 2004.
Cash from Apache’s operations totaled $1 billion for the 2005 first quarter, up 36 percent from $737 million in the year-earlier period. High oil and gas prices were a strong driver for first-quarter financial results, the company added.
However, Apache’s production for the first quarter of the year also came in strong, averaging 462,000 barrels of oil equivalent per day, up 7 percent from the first quarter of 2004 and up slightly from last year’s fourth quarter.
“Our successful drilling program in the first quarter and deep inventory of opportunities should contribute to Apache’s financial and operating results in coming quarters,” said Steve Farris, Apache’s chief executive officer.
Chesapeake: production up 34 percent
Chesapeake Energy posted 2005 first-quarter net income of $119.5 million or 36 cents per share on revenue of $783.5 million, up from 2004 first-quarter net income of $112.6 million on revenues of $563.1 million in the year-ago period. Adjusted for various losses, the company said it would have made a 2005 first-quarter profit of $192.6 million or 56 cents per share.
Chesapeake’s daily production during the 2005 first quarter averaged 1.16 billion cubic feet of natural gas equivalent, a 34 percent increase over the 867 million cubic feet in the 2004 first quarter. Of the daily increase in year-over-year production, 60 percent came via the drill bit and 40 percent from acquisitions, the company noted.
Chesapeake said it began 2005 with estimated proved reserves of 4.9 trillion cubic feet of natural gas equivalent and ended the first quarter of 2005 with 5.4 trillion cubic feet of reserves, an increase of 11 percent.
The fast-growing independent noted that the 2005 first quarter was Chesapeake’s 15th consecutive quarter of production growth. Production during this period increased 190 percent, for an average compound quarterly growth rate of 7.4 percent and an average compound annual growth rate of 32.6 percent.
