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Anadarko to cut 2002 capital spending by half Record earnings projected for 2001, but company says plans now reflect downturn in industry Kristen Nelson PNA Editor-in-Chief
In spite of expected record earnings for 2001, Anadarko Petroleum Corp.’s 2002 capital spending plan will be approximately $2 billion, about 50 percent of 2001 volumes. The company said actual spending levels could vary considerably depending on commodity prices. The proposed budget, which hasn’t yet gone to the company’s board for approval, would include $500 million for domestic and international exploration.
“Overall, 2001 was a great year for Anadarko,” John N. Seitz, president and chief executive officer of Anadarko, said in a Jan. 14 statement. “However, fourth-quarter results will clearly reflect the downturn in the industry. In reaction to these changing market conditions, in July of 2001, we began slowing our drilling program — which impacted fourth-quarter volumes and will affect 2002 financial and operating results. ...
“It’s simply the wrong time in the commodity price cycle to build organic production growth. Instead, now is the time to buy back stock, build reserves and build our inventory of drilling locations to take advantage of the next up-turn in oil and gas prices,” Seitz said.
Record earnings for 2001 Anadarko said that although fourth-quarter earnings are expected to be only about 25 cents a share, it is projecting record full-year earnings of $3.25 a share.
Annual production volumes for 2001 were up more than 75 percent, from 112 million barrels of oil equivalent to 199 million BOE in 2001.
The company increased proved reserves about 10 percent with a reserve replacement ratio of better than 2 to 1. 2001 finding costs were slightly more than $9 per BOE, largely due to reserve revisions and higher service costs.
“Flexibility is the common theme for our 2002 strategic plan,” Seitz said. “We have a proven record of success with exploration, and we have a great inventory of ready-to-drill locations. We’ve shown that we can add value through acquisitions, and we’ll continue to buy back APC stock. We could go shopping for oil and gas reserves among the billions of dollars of announced property sales on the market, but right now the best acquisition we see in the market is APC stock. We will continue to buy back our stock at current levels,” he said.
Alaska a long-term interest The company did not discuss specific projects in its preliminary 2001 results and 2002 capital spending release, but information from a Jan. 14 analyst presentation included some specifics.
The company listed 21 projects it characterizes as “bread and butter, low risk, immediate impact.”. There is one Alaska project on that list: Alpine, where Anadarko is a partner with operator Phillips Alaska Inc. Development drilling continues at Alpine, evaluation of expansion of the Alpine processing facilities is under way and permitting has begun for satellite fields north and south of Alpine at Fiord and Nanuq.
Alaska does not appear on Anadarko’s “high potential, near-term” project list, but both North Slope and Foothills appear on the company’s “home run, long-term” project list. Anadarko is a major North Slope exploration acreage holder, with federal acreage in the National Petroleum Reserve-Alaska and a major exploration license from the Arctic Slope Regional Corp. in addition to state of Alaska oil and gas leases.
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