Crediting higher commodity prices and oil sales volumes, independent producer Anadarko Petroleum Corp. on Friday reported fourth quarter and 2002 annual earnings that topped analysts’ projections for the company. For 2003 the company initially plans cap-ex spending below last year’s level, focusing on development and keeping its exploration powder dry until it sees how prices hold up.

The Houston-based producer reported net income rose 186% to $309 million, or $1.21 per share, in the fourth quarter from $108 million, or 41 cents per share, in the comparable period in 2001, due mostly to the upbeat climate for crude oil. The results, however, were partly offset by lower sales volumes for natural gas.

The company far exceeded the analysts’ consensus estimate of $1.06 earnings per share (EPS) for the quarter, as reported by Thomson/First Call. Anadarko said it expects to turn in an EPS of $1.15 for the first quarter of the current year, which is below analysts’ current projection for the company of $1.18.

For the full 2002, Anadarko reported net income of $825 million, or $3.21 per share, on revenue of $3.86 billion, compared to a net loss of $188 million, or 75 cents per share, on revenue of $4.72 billion for 2001. The producer’s 2001 results were negatively affected by a one-time charge of $1.57 billion related to the carrying value of oil and gas properties.

Anadarko trumped the analysts’ consensus estimate of $3.05 EPS for the company in 2002. The company said it expects an EPS of $3.90 in 2003, which is shy of the analysts’ current estimate of $3.96.

The producer on Friday also declared a quarterly dividend of 10 cents per share for holders of its common stock, and a dividend of $13.65 for holders of preferred stock in the company.

Andarko’s $2.3 billion capital budget for 2003 is expected to grow production to 200 million barrels of oil equivalent (boe), fund exploration in a number of key basins and reduce debt. Anadarko had spent nearly $2.4 billion last year.

“We recognize that this is a conservative budget, considering the commodity price trends we’re seeing for the remainder of the year,” said Anadarko President and CEO John Seitz. “But since so much of our activity is front-end loaded to the first half of the year, it makes sense to wait until mid-year to see if prices hold before we commit to a higher capital spending plan.”

The producer said it expects to spend $1.5 billion on development projects in the current year, up 35% from 2002, primarily for fields in the Gulf of Mexico, Western Canada, East and Central Texas, North Louisiana and Wyoming. But it has budgeted much less ($381 million) for exploration activities in North America, the Middle East, North and West Africa and Australia.

The capital spending budget also includes $107 million for infrastructure and other construction projects, and $337 million for capitalized interest and overhead.

For 2002, total natural gas, crude oil and natural gas liquids sales volumes were 197 million boe, almost flat with the 199 million boe in sales volumes in the prior year, the producer said. “Despite production losses due to two hurricanes and the strikes in Venezuela, we beat our target of 196 million boe,” Seitz noted.

“With stronger commodity prices — and still reasonable drilling and service costs — we’re ready to start growing production again, and we’re well positioned to do that in 2003 and 2004,” he said, noting that nearly two-thirds of Anadarko’s capital budget for 2003 will be devoted to development projects.

In 2002, Anadarko said its world wide reserve replacement rate from all sources was 112% of annual production, with 219 million boe of new reserves added. In the U.S. alone, the producer estimated it achieved a 185% replacement rate, with significant reserves coming from the Gulf of Mexico, Wyoming, Texas, Louisiana and Canada.

Anadarko reported it increased proved reserves worldwide by 1% to 2.33 billion boe at year-end 2002, with the U.S. accounting for 111 million boe. It said worldwide finding costs for proved reserves averaged $10.52 per boe in 2002, but the figure was significantly lower in the U.S. — $7.77 per boe.

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