Anadarko writedown triggers loss

Allen Baker

Anadarko Petroleum Corp. reported a loss of $270 million for the third quarter after chopping the carrying value of gas properties in Canada and South America by $483 million. Without those writedowns, earnings were $213 million, still down 14 percent from $247 million a year earlier.

Revenues dipped 4 percent to $1.74 billion from $1.82 billion even though production rose significantly.

Volume was up 29 percent to 558,000 barrels of oil equivalent daily from 434,000 in the same quarter a year earlier. That figure was down from 570,000 equivalent barrels in the second quarter, when Anadarko earned $401 million. The volume drop was attributed to the sale of 20,000 barrels a day of low-margin production in Guatemala.

And Anadarko’s bottom line was a far cry from the $656 million in profits the company generated back in the first quarter.

Company officials put on a good face anyway. Houston-based Anadarko pulled up more oil and gas than expected due to higher production at the Alpine field in Alaska, where Anadarko has a 22 percent stake, and in Algeria, according to Robert J. Allison Jr., Anadarko chairman and chief executive officer. Increased recovery of natural gas liquids also helped the operating results, which he called better than expected.

With natural gas bringing an average of $2.89 per thousand cubic feet, instead of the $3.83 of a year earlier, it was tough to keep profits up. Oil brought an average of $21.66, down $6.02 per barrel.

Anadarko also poured $739 into capital spending, up 40 percent from the $526 million the company spent in the year-earlier quarter.

But the money is being redirected a bit, away from pure natural gas prospects.

“In response to relatively weak natural gas prices and higher service costs over the last few months, we have slowed the pace of U.S. gas development drilling and shifted some of our capital to concentrate on more high-potential exploratory drilling and oil-prone projects,” Allison said.

The company was running 94 of its own rigs in July, and now has just 74 working. But there are four deep-water wells in the Gulf of Mexico that are good prospects, Allison said.

He predicts production in the current quarter will be about even with the third-period figures.