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Anadarko Petroleum Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 23, 2011 09:21AM
Anadarko Petroleum Corp. (APC) filed Annual Report for the period ended 2010-12-31. Anadarko Petroleum Corp. has a market cap of $38.58 billion; its shares were traded at around $77.85 with a P/E ratio of 43.3 and P/S ratio of 3.5. The dividend yield of Anadarko Petroleum Corp. stocks is 0.5%. Anadarko Petroleum Corp. had an annual average earning growth of 8.6% over the past 10 years.Hedge Fund Gurus that owns APC: John Paulson of Paulson & Co., Kenneth Fisher of Fisher Asset Management, LLC, Chris Shumway of Shumway Capital Partners LLC, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC. Mutual Fund and Other Gurus that owns APC: Diamond Hill Capital of Diamond Hill Capital Management Inc, David Williams of Columbia Value and Restructuring Fund, John Buckingham of Al Frank Asset Management, Inc., Brian Rogers of T Rowe Price Equity Income Fund, Westport Asset Management, David Dreman of Dreman Value Management, Mario Gabelli of GAMCO Investors, Bill Frels of Mairs & Power Inc. , Dodge & Cox, Jeremy Grantham of GMO LLC, Pioneer Investments.
Highlight of Business Operations:
The Greater Natural Buttes field, where the Company operates over 1,900 wells, is a core asset for the Company. In 2010, production volumes from the field increased by 10% over 2009 volumes. The Company drilled 263 wells during the year, while reducing the cost per foot drilled by 16%. Based on efficiency gains within the drilling program and a slightly higher rig count, Anadarko was able to drill 70% more wells than were drilled in 2009, while decreasing capital spending per well. The Company has identified more than 6,000 potential locations in the Greater Natural Buttes field for future development. Many of these locations are infill drilling opportunities focused on down-spacing from 40-acre well density to 10-acre well density. Another core area for the Company is the Wattenberg field, where Anadarko operates over 4,800 wells. During 2010, the Company drilled 363 wells in the Wattenberg field and increased sales volumes 11% compared to 2009. Liquids sales volumes in the field increased 20% during the year as the Company focused its efforts on liquids-rich areas. During 2010, 1,777 fracture stimulation treatments were performed compared to 1,010 in 2009. In 2011, Anadarko plans to maintain an active drilling program in these tight gas areas with a focus on liquids-rich areas.
In the Appalachian basin, where the Marcellus shale play is being actively developed, the Company entered into a joint-venture agreement that permits a third party to participate with the Company as a 32.5% partner in the Companys Marcellus shale assets. The third party may earn 100,000 net acres in exchange for funding 100% of the Companys share of 2010 development costs and 90% of these costs thereafter, up to approximately $1.4 billion, with an estimated funding-completion date in late 2012. During 2010, 53 operated horizontal wells were spud and 22 wells were completed. Anadarko also participated in 158 new horizontal wells and 110 completions as a non-operating partner in the area. Gross production increased from 40 million cubic feet per day (MMcf/d) in January 2010 to a year-end exit rate of approximately 330 MMcf/d. During 2010, gross delivery capacity increased to 1.2 billion cubic feet per day (Bcf/d). The Company plans to increase operated activity in this area in 2011.
Gulf of Mexico In the Gulf of Mexico, Anadarko owns an average 63% working interest in 505 blocks. The Company operates seven active floating platforms, holds interests in 26 producing fields and is in the process of delineating and developing five additional fields in the area. Anadarko plans to allocate approximately 15% of its 2011 oil and gas exploration and production segment capital budget to the deepwater Gulf of Mexico with the understanding that the regulatory environment continues to progress.
In April 2010, the Macondo well in the Gulf of Mexico, in which Anadarko holds a 25% non-operating leasehold interest, discovered hydrocarbon accumulations. During suspension operations, the well blew out, an explosion occurred on the Deepwater Horizon drilling rig, and the drilling rig sank, resulting in the release of hydrocarbons into the Gulf of Mexico. The Macondo well was permanently plugged on September 19, 2010, when BP Exploration & Production Inc. (BP), the operator and 65% owner of the Macondo lease, completed a bottom kill cementing operation in connection with the successful interception of the well by a relief well. Investigations by the federal government and other parties into the cause of the well blowout, explosion, and resulting oil spill, as well as other matters arising from or relating to these events, are ongoing. For additional information see Note 2Deepwater Horizon Events in the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K, Risk Factors under Item 1A of this Form 10-K and Legal Proceedings under Item 3 of this Form 10-K.
Contracts and Partners Since October 1989, the Companys operations in Algeria have been governed by a Production Sharing Agreement (PSA) between Anadarko, two third parties, and Sonatrach, the national oil and gas company of Algeria. Anadarkos interest in the PSA for Blocks 404 and 208 is 50% before participation at the exploitation stage by Sonatrach. The Company has two partners, each with a 25% interest, also prior to participation by Sonatrach. Under the terms of the PSA, oil reserves that are discovered, developed and produced are shared by Sonatrach, Anadarko and the remaining two partners. Sonatrach is responsible for 51% of the development and production costs, Anadarko is responsible for 24.5% and its two partners are responsible for 12.25% each. Anadarko and its partners have completed the exploration program on Blocks 404 and 208 and now participate only in development activity on these blocks. Anadarko and its joint-venture partners funded Sonatrachs share of exploration costs and are entitled to recover these exploration costs from production during the development phase.
Exceptional Profits Tax In July 2006, the Algerian parliament approved legislation establishing an exceptional profits tax on foreign companies Algerian oil production. In December 2006, implementing regulations regarding this legislation were issued. These regulations provide for an exceptional profits tax imposed on gross production at rates of taxation ranging from 5% to 50% based on average daily production volumes for each calendar month in which the price of Brent crude averages over $30 per barrel. Exceptional profits tax applies to the full value of production rather than to the amount in excess of $30 per barrel.
Stocks Discussed: APC,