Same story, different company. That summarizes third quarterresults reported recently by Anadarko Petroleum. Like everyoneelse, Anadarko suffered from lower gas and oil prices last quarter,and the hurt shows plainly in its financials.
Anadarko reported a net loss available to common stockholders of$2.3 million or 2 cents/share for the third quarter of 1998.Revenues for the period totaled $140.2 million. For the same periodin 1997, Anadarko reported net income of $17.1 million or 14cents/share on revenues of $158.7 million. The decline wasattributed primarily to substantially lower commodity prices foroil, gas and natural gas liquids (NGLs), partially offset byincreased production volumes. Costs and expenses were higher in thethird quarter. Operating expense increased due to acquisition ofdomestic producing properties and first production from Algeria.Higher administrative and general expense, increased interestexpense, and preferred stock dividends also affected the 1998 thirdquarter performance.
Anadarko produced an average of 497 MMcf/d in the third quarter,up slightly from 494 MMcf/d in the third quarter of 1997. Thecompany’s gas sold for $1.82/Mcf, down 10% from $2.02/Mcf in thethird quarter of 1997. Third quarter 1998 gas volumes remainedstrong despite temporary storm-related production shut-ins in theGulf of Mexico in August and September.
“Like others in the oil and gas industry, Anadarko’s financialperformance during the third quarter of 1998 continued to reflectweak oil and gas prices,” CEO Robert J. Allison, Jr. “Despite lowerprices, we are on track to set company records for productionvolumes and reserve replacement for the full year 1998. We expectto report an 8.3% increase in production volumes in energyequivalent barrels for 1998 compared to 1997 levels. Overall, weexpect a record reserve replacement for the full-year 1998.”
NGL sales volumes for the third quarter of 1998 rose 25% to 1.8million barrels, or 19 million barrels/d, up from 1.4 millionbarrels or 16 million barrels/d during 1997’s corresponding period.Increased NGLs volumes were offset by lower NGLs prices, which fell36% from $14.65/barrel in the third quarter of 1997 to $9.44 in1998’s same period.
Anadarko’s board replaced its expired stockholders rights planwith a new one. The terms of the new poison pill have substantiallythe same purpose and effect as the former plan. “The Rights Plan isdesigned to assure that all of the company’s stockholders receivefair and equal treatment in the event of any proposed takeover ofthe company and to guard against abusive tactics to gain control ofAnadarko without paying all stockholders a premium for thatcontrol,” said Allison. “The rights plan was not being adopted inresponse to any specific takeover threat, but is a response to thegeneral takeover environment in the oil and gas industry.”
Anadarko said recently its annual energy production is expectedto grow at an average rate of 18% per year, from 48 million energyequivalent barrels (EEBs) in 1998 to an estimated 92 million EEBsin 2002 (See Daily GPI Oct. 22, 1998). The company said the newproduction forecast is based on development of known fields anddoes not include any new exploration discoveries.
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