Anadarko Petroleum CEO Robert J. Allison Jr. said Friday that he expects the company to report record earnings this year after a major cost-cutting program, better-than-expected performance from exploration and production operations and higher realized commodity prices. The company also is raising its dividend 40% to 14 cents/share. APC shares were up about 1% Friday to $43.25.

“We’re making significant progress on cutting overhead costs,” said Allison. “We’ve made new discoveries this quarter in Algeria and we’re encouraged by the recent results of our exploration program in the deepwater Gulf of Mexico. Meanwhile, our U.S. onshore bread-and-butter plays, such as the Bossier trend in East Texas and North Louisiana, continue to deliver impressive results quarter to quarter. We’re also seeing promising results from new onshore plays such as the deep Haley trend in West Texas and from the redevelopment of some Gulf of Mexico properties.

“Based on these successes, Anadarko is now expecting greater improvement in its finding and development costs — which we expect to be better than $7.50 per barrel for the year,” he said. “That number is lower than our previous guidance, and a significant improvement over last year.”

The company’s net income after unusual charges rose 47% for the quarter to $1.09/share and 95% for the first nine months of the year to $3.92/share. Net income excluding special charges and restructuring costs rose 97% to $1.46/share for the quarter and 107% to $4.34/share for the first nine months of the year compared to the same period in 2002.

Anadarko’s total North American natural gas production during the quarter was up 4.2% to 1,838 MMcf/d and realized gas prices soared 72% to $4.51 from $2.62/Mcf in 3Q2002. U.S. gas production was up 8% to 1,481 MMcf/d, but Canadian gas production fell 8.2% to 357 MMcf/d, the company reported. Its total worldwide oil production fell 1% to 189,000 b/d, but realized crude oil prices rose $2.34 to $26.36. Cash flow from operating activities totaled $884 million in the quarter, up 63%.

Anadarko said it will increase its 2003 capital budget by $100 million, based on improved Nymex futures prices for oil and gas, and it remains committed to reducing debt this year by $300 million. The increased capital budget of $2.8 billion will allow the company to spend additional funds to advance the development of several successful programs such as the East Texas Bossier and North Louisiana Vernon plays, and conduct further delineation at some deepwater Gulf of Mexico discoveries.

Oil and gas sales volumes are expected to total 49 million boe in the fourth quarter. Full-year 2003 sales volumes are expected to total 192 million boe. The company said it expects net income of $275 million, or $1.10 per share (diluted), for the fourth quarter and earnings of $1.3 billion, or $5 per share (diluted), for the year.

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