Anadarko Petroleum Corporation today announced second-quarter 2008 net income available to common stockholders totaled $23 million, or $0.05 per share (diluted). Income from continuing operations totaled $16 million, or $0.03 per share (diluted). The net income results include certain items affecting comparability that are typically excluded by the investment community in published estimates. In total, these items reduced net income by approximately $815 million, or $1.73 per share (diluted) on an after-tax basis. Cash flow from continuing operations in the second quarter of 2008 was $438 million, and discretionary cash flow totaled $2.31 billion. Capital expenditures for the quarter were approximately $1.23 billion.
"In addition to generating more than $1 billion in free cash flow, we are very pleased with our production volumes for the quarter," Anadarko Chairman and CEO Jim Hackett said. "We lost more than eight weeks of production from Independence Hub, and we still met our guidance for the quarter. Factoring in the additional four million BOE (barrels of oil equivalent) that would have been produced had the Hub been fully operational; we would have again shown solid sequential growth relative to the prior quarter's outstanding results. Our strong quarterly operational performance is a reflection of the depth of Anadarko's portfolio and our ability to grow organically. We are confident that we will achieve our full-year production guidance of 207 million to 212 million BOE."
SECOND-QUARTER 2008 OPERATIONAL HIGHLIGHTS
- Achieved record daily production in the Greater Natural Buttes and the Powder River Basin
- Expanded West Africa exploration program and increased estimated recoverable resource range of Jubilee
- Moved Deepwater Millennium drillship to Brazil and spud first operated pre-salt test
- Initiated testing of prospects in the Marcellus Shale play
"Our lower-risk U.S. onshore assets continue to perform very well," said Hackett. "In the Rocky Mountains, our operations in the Greater Natural Buttes area and the Powder River Basin set daily production records during the second quarter. As a reminder, we have actively managed our commodity price risk in the Rockies with firm transportation commitments and attractive basis hedges at a differential to NYMEX of approximately $1.50 in 2008 and $1.25 in 2009. Our Southern region assets also performed well during the quarter, and our Gulf of Mexico oil volumes were higher than anticipated. All together, these assets contributed nearly one million BOE above our projections, allowing us to meet our guidance for the quarter and largely offset the one-month incremental loss at Independence Hub, which was not accounted for in the guidance provided in the first-quarter earnings release," Hackett added.
Anadarko also announced a successful appraisal at the Mahogany-2 well in the Jubilee field offshore Ghana and successfully tested the upper and lower zones of the well, recovering light, sweet crude at significant flow rates. As a result, the partnership increased the field's estimated recoverable resources to a range of 500 million to 1.8 billion barrels of oil and is still targeting 2010 for initial production. During the quarter, Anadarko also expanded its acreage position within the under-explored Jubilee-type Cretaceous trend along the coast of West Africa.
The company moved the Deepwater Millennium drillship to Brazil and spud its first operated pre-salt test in deep water at the Wahoo prospect on BM-C-30 during the second quarter. Once drilling operations are completed at Wahoo, Anadarko plans to move the drillship back to the Espirito Santo Basin to re-enter and deepen the Serpa prospect in order to reach the primary objective. During previous drilling operations, an active petroleum system was proven in the pre-salt secondary objectives penetrated at Serpa.
In Pennsylvania, Anadarko and its partners commenced drilling operations on two wells in the Marcellus Shale play in the Appalachian Basin with encouraging results. The wells have been cored and further evaluation is under way. Anadarko has access to approximately 625,000 gross acres in the fairway of the Marcellus Shale play.
SECOND-QUARTER 2008 VOLUMES
Second-quarter 2008 sales volumes of natural gas, crude oil and natural gas liquids totaled 50 million BOE, or 548,000 BOE per day. Second-quarter 2008 natural gas sales volumes averaged 1.87 billion cubic feet per day. Oil sales volumes in the second quarter averaged 195,000 barrels per day, and natural gas liquids sales volumes averaged 41,000 barrels per day.
