|
Anadarko lowers 2004 production target Numbers fall in wake of weather-related delays at Marco Polo development Petroleum News
Anadarko Petroleum, which reported both reduced earnings and production in the 2003 fourth quarter vs. a year earlier, also has lowered its growth target for this year, largely because of weather-related delays at its Marco Polo development in the Gulf of Mexico.
Despite the setbacks, Anadarko scored record earnings in 2003 and increased year-end proved reserves 8 percent to 2.5 billion barrels of oil equivalent, the company told analysts in a Jan. 30 conference call.
But the big independent also spent a lot of time justifying its reserves, noting that engineering consultant Netherland, Sewell okayed its report after reviewing 70 percent of its 2003 reserve additions and about half of its existing proved reserves.
“We know the quality of reserves is a critical issue, particularly in the light of recent industry events,” said Mark Pease, vice president of onshore and offshore operations for Anadarko.
How industry accounts for its reserves has come under scrutiny by the U.S. Security and Exchange Commission. Shell recently reduced its proved reserves by a shocking 20 percent, followed by a 17 percent write down by Denver-based independent Forest Oil.
“We have received their (Netherland, Sewell’s) letter of confidence in both our process and the reasonableness of our numbers,” Anadarko’s new chief executive officer, James Hackett, said in his first earnings call with analysts. “I am confident about Anadarko’s proved reserve numbers.”
Anadarko said it “cost-effectively converted a significant number” of proved undeveloped reserves or PUDs into the proved developed category, which increased its proved developed inventory to 69 percent from 67 percent of its worldwide reserves. The company said it replaced nearly 200 percent of production last year, with most of it coming via the drill bit. U.S. reserves up 12 percent In the United States alone, Anadarko’s reserves increased 12 percent to 1.7 billion barrels of oil equivalent, representing 68 percent of the overall increase, with primary growth areas identified by the company as the Gulf Mexico, North Louisiana, Texas and Wyoming. Canadian proved reserves increased 9 percent to 314 million barrels of equivalent, representing 12 percent of the total, the company said.
“We know the length of time each PUD remains on the books as undeveloped and have an action plan for developing them,” Hackett pledged.
With regard to earnings, Anadarko reported a 2003 fourth-quarter profit of $294 million or $1.17 per share on revenues of $1.28 billion, down from $309 million or $1.21 per share on revenues of $1.12 billion earned in the quarter a year earlier.
Anadarko also reduced its 2004 production growth forecast to 1 to 4 percent from 4 to 10 percent with later-than-expected startup of its deepwater Marco Polo field. However, the company said it expects an annual growth rate of 3 to 7 percent over the following two years.
Anadarko also said it planned to invest $2.6 billion to $2.9 billion on capital projects this year, slightly more than the nearly $2.4 billion it spent last year. The company said it reduced its total debt by $400 million to just over $5 billion in 2003, and saw its debt decline to 37 percent of capitalization from 44 percent. Finding and development costs fell to $6.95 per barrel of oil equivalent, a considerable improvement over the previous year’s double-digit performance.
Anadarko also managed to generate record earnings of $1.3 billion last year, helped by a strong commodity price environment.
| 