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Anadarko Bemoans Earnings, Boasts New Field

Anadarko Bemoans Earnings, Boasts New Field

Anadarko Petroleum lamented low oil prices when it reported second quarter net income that was about one-fifth what it was in the same period last year. For the second quarter net income applicable to common stockholders was $2.7 million Revenues were $137.6 million. By comparison, net income for the second quarter of 1997 was $13.8 million on revenues of $139 million.

"Low oil prices hurt our earnings," said Anadarko CEO Robert J. Allison Jr. "But that's a short-term problem. We believe prices will recover. I think it's more important that our exploration and development drilling programs are on track to give us our best operating results in history. At the end of the first quarter, we had already replaced 240% of our expected production for 1998 - and we still have a number of potentially significant wells drilling."

Anadarko's gas production during the second quarter was 42.2 Bcf of gas or 463 MMcf/d. This represents a slight decrease over second quarter 1997 gas production of 43.8 Bcf or 481 MMcf/d. The decrease in volumes is partly due to annual allowable testing in the West Panhandle Field of Texas and in the Hugoton Embayment. Anadarko's average price for gas in the second quarter was $1.98/Mcf, compared to $1.85/Mcf in the same period of 1997.

Anadarko's gas liquids sales volumes in the second quarter increased 52% to 1.6 MMbbl or 17 Mbbl/d compared to 1.0 MMbbl or 11 Mbbl/d in the same period of 1997. Higher volumes were partly offset by 19% lower liquids prices, averaging $10.90/barrel in the second quarter, compared to $13.45/barrel in the same period of 1997.

Looking on the bright side, the company made a significant discovery in its sub-salt exploration program. The Tanzanite discovery is in the Gulf of Mexico at Eugene Island South Addition Block 346 in 314 feet of water about 75 miles offshore Louisiana. Anadarko said it believes the reservoir contains at least 140 million energy equivalent barrels (EEBs) of reserves. "The Tanzanite discovery dramatically increases our domestic reserve base (524 million EEBs at year-end 1997)," Allison said. "We believe this could be one of the largest discoveries made in the shallow waters of the Gulf of Mexico since we discovered the Matagorda Island 622/623 Field in 1980."

Joe Fisher, Houston

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