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On fast forward Anadarko CEO Robert Allison sets course to improve stock price Petroleum News Staff
Big U.S. independent Anadarko Petroleum Corp., a week after CEO John Seitz abruptly quit over the company’s languishing stock price, attempted to lift investor spirits with upbeat earnings news and promises of a brighter future.
New CEO Robert Allison, who also wears hats as chairman and president of the company, selected March 31 and the prestigious Howard Weil Energy Conference in New Orleans, La., to announce that Anadarko had increased its 2003 first-quarter profit estimate to $1.35 per share from $1.15 per share.
Anadarko’s $1.35 per share estimate for the first quarter compares to $1.21 per share earned in the previous quarter and $0.34 per share earned in the year-ago quarter when natural gas prices were in the tank.
Allison also changed Anadarko’s cash flow estimate for the first quarter to $3 per share from $2.60 per share. Before changes in assets and liabilities, he said, company operations would expect to generate about $775 million at $3 per share. Company will shave debt Allison also reaffirmed Anadarko’s intention to shave $300 million of debt by the end of the year. And he announced a plan to further strengthen Anadarko stock by reducing the number of shares outstanding used to calculate diluted earnings per share.
“With the strong oil and gas prices, we’re looking for first-quarter cash flow and earnings that are more than 15 percent above guidance levels we issued just two months ago,” Allison said.
Allison also reaffirmed Anadarko’s forecast of 5 percent production growth in for 2003 and a 12 percent increase for 2004. And he said 2003 first-quarter production volumes would be 20 percent higher than a year ago.
“We will continue to improve our returns and cash margins, and we will continue to work on costs,” Allison pledged.
He also reminded analysts at the conference that Anadarko resumed its Algerian exploration program last October, resulting in two oil discoveries on Block 404 east of the Hassi Berkine field, and new finds at the company’s Saddle Hills play in Canada. Takeover speculation But Allison dismissed a rumor that differences between himself and Seitz over a possibility of a takeover of Anadarko factored into Seitz’ resignation, adding it was Anadarko’s lackluster stock performance that led to his sudden departure.
Analysts have speculated about a takeover since the announced merger of big independents Devon Energy Corp. and Ocean Energy Inc., a marriage that would displace Anadarko as the largest U.S. independent.
Allison has said in the past that the best way to avoid a takeover is by keeping a company’s stock price strong, making a deal too expensive for a potential suitor.
Allison’s efforts apparently had some positive impact on Anadarko’s stock price, which rose by $1.69 to $46.37 per share at market close April 1, compared to the $44.68 per share close before the Seitz announcement on March 25. However, the company’s share price still remained well below its 52-week high of $58.13 per share and 2000 high of $76 per share.
In 2000, Seitz replaced Allison as CEO while keeping his positions as president and chief operating officer of the company. Allison, who remained as chairman of the board, had held the CEO position since the mid-1980s.
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