Anadarko Petroleum Corporation has announced its third-quarter 2017 results, reporting a net loss attributable to common stockholders of US$699 million, or US$1.27 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items increased the net loss by US$272 million, or US$0.50 per share (diluted), on an after-tax basis. Net cash provided by operating activities in the third quarter of 2017 was US$639 million.
- Announced a US$2.5 billion share-repurchase program and entered into an accelerated share repurchase (ASR) agreement to execute upon the first US$1.0 billion by year end.
- Achieved double-digit oil-volume growth over second-quarter 2017 in the Delaware Basin, DJ Basin and deepwater Gulf of Mexico assets.
- Improved oil production mix to 57% versus 42% in the third quarter of 2016, significantly improving margins per barrel.
- Entered into an agreement to sell the company's Moxa asset in southwest Wyoming for approximately US$350 million.
- Received clarity on the Ghana maritime boundary, enabling additional high-margin oil development, and completed the foundational Legal and Contractual Framework for the Mozambique LNG project.
"I am very proud of the efforts exhibited by our people and the results achieved in the face of an unusually active hurricane season in the Gulf of Mexico and a continuing volatile commodity environment," said Al Walker, Anadarko Chairman, President and CEO. "We have made significant progress in shifting our production mix toward higher-value oil, which has improved our margins per barrel by about 34% year over year. We expect to improve our margins further as we finalise the sale of our Moxa gas asset, continue focusing investments in our high-quality oil plays, and drive greater efficiencies into the system. Although we have adjusted our full-year sales-volume guidance to reflect the impacts of hurricanes Harvey, Irma and Nate, as well as the sale of our Moxa asset, we still expect to exit 2017 with production rates of approximately 150 000 bpd combined from the Delaware and DJ basins, and more than 130 000 bpd from the deepwater Gulf of Mexico.
"Looking to 2018, we will continue to demonstrate financial discipline as a foundational principle," added Walker. "We will remain focused on returns by continuing to allocate upstream capital toward the higher-margin assets in our portfolio, which should generate substantial free cash flow in a US$50 oil-price environment, with total capital spending, including Anadarko midstream spending on infrastructure in the Delaware Basin, inside of discretionary cash flow from operations."
Anadarko's third-quarter 2017 sales volume of oil, natural gas and natural gas liquids (NGLs) totaled 58 million boe, or an average of 626 000 boe/d.
In the Delaware Basin, Anadarko remains on track to achieve its expected exit rate of approximately 50 000 bpd. In the third quarter, the company achieved a new oil sales-volume record of 44 500 bpd, while averaging 37 000 bpd - a 13% increase over the second quarter of 2017. Anadarko averaged 16 rigs and six completions crews in the basin during the quarter, as it continued to focus on capturing operatorship over approximately 70% of its gross acreage position. Anadarko also made significant progress in applying its proven development model to the Delaware Basin, which includes building gathering and processing infrastructure to enable future growth and expanding takeaway capacity.
Anadarko also has a clear line of sight to reaching its expected exit rate of about 100 000 bpd in the DJ Basin, where in the third quarter it achieved an oil production record of more than 90 000 bpd, while averaging 83 000 bpd, representing a 10% increase over the prior quarter. The company averaged six operated rigs and four completions crews in the basin during the quarter. The number of wells turned to sales increased by 70% versus the second-quarter 2017. The company continues to see strong results from its new completion design, which has been applied to more than 70 wells, the majority of which have been producing more than 150 days. These wells are demonstrating a cumulative oil uplift of more than 40% when compared to the previous design.
In the deepwater Gulf of Mexico, the company increased oil production by more than 10% relative to the second quarter of 2017, averaging 126 000 bpd during the quarter. Production of approximately 840 000 boe was deferred during the quarter as a result of hurricanes Harvey and Irma. The company's hub-and-spoke infrastructure continues to deliver significant value with new tiebacks at Horn Mountain and Marlin. Anadarko also added new tieback opportunities as the apparent high bidder on 10 blocks in the most recent Gulf of Mexico lease sale.
International and Alaska sales volume averaged 102 000 bpd, slightly less than the prior quarter due to the timing of liftings in Algeria. The International Tribunal for the Law of the Sea (ITLOS) has defined the border between Ghana and Côte d'Ivoire, which enables continued development in the TEN field. In addition, the partnership received approval from the Ghanaian government for the Jubilee full-field plan of development earlier this month, with drilling operations expected to commence in 2018. Anadarko also is continuing to generate substantial momentum with its Mozambique LNG project, having finalised the "marine concession" agreements with the Government of Mozambique during the quarter. These agreements marked the completion of the foundational Legal and Contractual Framework. Subsequent to quarter end, Anadarko also reached a 20-year Sale and Purchase Agreement (SPA) for 2.6 million t of LNG per annum with PTT Public Company Limited of Thailand. The SPA is pending approval by the Government of Thailand.
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