Anadarko Petroleum Corporation at a Glance

Uppers

  • Good salaries and benefits.

Downers

  • Reputation tarnished by involvement in 2010 Deepwater Horizon explosio.

The Bottom Line

  • Anadarko is among the largest independent oil and natural gas exploration and production companies in the world with both domestic and international exploration opportunities.

About Anadarko Petroleum Corporation

Anadarko Petroleum has ventured beyond its original area of operation -- the Anadarko Basin -- to explore for, develop, produce, and market oil, natural gas, natural gas liquids, and related products worldwide. The company boasts reported proved reserves (90% of which is located in the US) of 1.7 billion barrels of oil equivalent. Additional assets include coal, trona (natural soda ash), and other minerals. Anadarko operates a handful of gas-gathering systems in the Mid-Continent. Internationally, the company has substantial oil and gas interests in Algeria. It also has holdings in Brazil, Mozambique, and West Africa.

Operations

Anadarko operates three segments: Oil and Gas, Midstream, and Marketing.

The Oil and Gas segment explores for and produces oil, natural gas, and NGLs (natural gas liquids). Its properties in the US consist of some 12,700 wells (and 3,500 nonoperated wells) across in DJ Basin in Colorado; Delaware Basin, Eagleford, and Eaglebine in Texas; Greater Natural Buttes in Utah; Greater Green River Basin in Wyoming; and Marcellus in Pennsylvania. It also has operations in Lousiana and Kansas. Internationally, in Algeria the company works Blocks 404 and 208 in the Sahara Desert where it has a 24.5% stake; the offshore West Cape Three Points block and Deepwater Tano Block in Ghana; and Offshore Area 1 in Mozambique.

The Marketing segment brings in nearly 45% of sales and actively manages Anadarko's worldwide oil, natural gas and NGLs sales, minimizing market-related shut-ins, maximizing realized prices, and managing credit risk exposure.

Accounting for over 5% of sales, the Midstream segment aids the oil and gas segment by conducting gas gathering, processing, transportation, and produced-water disposal. It has 34 gathering systems and 72 processing and treating facilities.

Geographic Reach

Texas-based Anadarko's assets include US onshore resource plays in the Rocky Mountains area, the southern US, and the Appalachian basin. It is one the largest independent producers in the deepwater Gulf of Mexico, and has production and exploration activities worldwide, including high-potential basins located in Alaska, Algeria, Brazil, Côte d'Ivoire, Ghana, Kenya, Mozambique, New Zealand, and other countries.

The US is Anadarko's largest market and accounts for more than 80% of the company's total revenue. Algeria is its primary non-US territory at nearly 15% of sales; other countries account for the remainder.

Sales and Marketing

Anadarko sells crude oil and natural gas via a range of contractual agreements, including indexed, fixed-price, and cost-escalation-based agreements. Most of the company's US oil, condensate, and NGLs production is sold under contracts.

The company's oil is primarily sold to marketers, gatherers, and refiners. Natural gas is sold mainly to interstate and intrastate natural gas pipelines, direct end-users, industrial users, local distribution companies, and natural gas marketers.

Anadarko is contractually committed to deliver nearly 900 billion cu. ft. of natural gas to various US customers through 2031. It also delivers some 10 million barrels of oil to ports in Algeria and Ghana.

Financial Performance

Weak international oil and natural gas prices have put a huge dent in Anadarko's revenue since 2014.

In fiscal 2016, sales fell a further 10% to $8.4 billion as overall oil production volumes remained steady while prices fell further. Natural gas prices likewise fell, as did production. On the upside, the company recorded an $88 million improvement in NGLs (natural gas liquids) sales and a $68 million increase in gathering, processing, and marketing. The latter related to higher gas and NGLs volumes at the DJ Basin and DBM Complex.

Anadarko posted its third consecutive net loss in 2016 as gas prices remained below the break-even point and it suffered hefty write-downs of its producing assets values. In fiscal 2016 the company reduced its net loss to $3.1 billion due to lower impairment charges and layoffs.

Cash from operations was considerably higher in 2016 than 2015 at $3.0 billion versus a cash outflow of $1.9 billion. The improvement relates to the $5.2 billion settlement Anadarko paid in 2015 for environmental damages. Aside from this item, operating cash flow benefited from a $881 million tax refund.

Strategy

To cope with revenue falls and heavy losses, Anadarko has been selling off $4 billion of assets including in its US Onshore Marcellus and Eagle Ford oil and gas assets, as well as its interest in Springfield Pipeline. It also sold shares in Western Gas Equity Partners. Additionally, in 2016 Anadarko reduced capital expenditure by 44%, laid off 17% of its workforce carried out layoffs, and reduced dividends.

The extra liquidity offered by the sales will allow Anadarko to develop its higher margin properties, such as Delaware Basin in Texas and DJ Basin in Colorado, as well as its deepwater assets in the Gulf of Mexico -- it made a major Gulf acquisition in 2016. With gas prices having risen somewhat since 2016, the company has more scope for capital expenditure. It ramped up its capital program to $4.7 billion, 80% of which will be put towards its US onshore upstream and midstream activities and in the Gulf of Mexico.

Mergers and Acquisitions

In 2016 Anadarko acquired the deepwater Gulf of Mexico assets of Freeport McMoRan Oil & Gas for $2 billion.

In 2015 Anadarko made a bid to acquire Apache, which was rebuffed.

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Anadarko Petroleum Corporation

1201 Lake Robbins Dr
The Woodlands, TX 77380-1124
Phone: 1 (832) 636-1000

Stats

  • Employer Type: Public
  • Stock Symbol: APC
  • Stock Exchange: NYSE
  • Chairman, President and CEO: R. A. Walker
  • EVP, Operations: Darrell E. Hollek
  • Chairman, President and CEO: R. A. Walker
  • 2016 Employees: 4,500

Major Office Locations

  • The Woodlands, TX
  • Houston, TX

Other Locations

  • Aurora, CO
  • Brighton, CO
  • Denver, CO
  • Platteville, CO
  • Washington, DC
  • Hugoton, KS
  • Golden Meadow, LA
  • Belfield, ND
  • Kirtland, NM
  • Rochester, NY
  • Chester, OK
  • Lindsay, OK
  • Ringwood, OK
  • Williamsport, PA
  • Bryan, TX
  • Buffalo, TX
  • Carrizo Springs, TX
  • Carthage, TX
  • Fort Stockton, TX
  • Fort Worth, TX
  • Franklin, TX
  • Kermit, TX
  • Midkiff, TX
  • Midland, TX
  • Tennessee Colony, TX
  • Price, UT
  • Casper, WY
  • Gillette, WY
  • Midwest, WY
  • Newcastle, WY
  • Powell, WY
  • Rock Springs, WY
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