Good salaries and benefits.
Reputation tarnished by involvement in 2010 Deepwater Horizon explosio.
Anadarko is among the largest independent oil and natural gas exploration and production companies in the world with both domestic and international exploration opportunities.
Anadarko Petroleum Corporation is one of the world’s biggest independent exploration and production companies that primarily sells oil, natural gas, and NGLs. The company has proved reserves of approximately 1.5 billion barrels of oil equivalent and owns 2,500 net oil wells and 6,500 net gas wells. Its conventional oil assets are mainly in the US Gulf of Mexico, but also in Algeria, and Ghana. The unconventional portfolio comprises the Delaware (Texas/ New Mexico) and DJ (Colorado) basins in the US. Anadarko is also engaged in midstream activities like gathering, processing, and transportation of company-produced and third-party energy products. It has roughly 30 gathering systems and 70 processing facilities. In 2019, Chevron Corporation announced plans to acquire Anadarko Petroleum for $50 billion (including debt) in the sixth-largest oil and gas deal in history.
Change in Company Type
Chevron Corporation announced plans to acquire Anadarko Petroleum in April 2019 for $50 billion ($33 billion for the company plus its $17 billion debt). Chevron was attracted by Anadarko’s global portfolio and its Permian Basin holdings (640,000 net acres), one of the most economical oil regions in the world. Additionally, Chevron will get a 55% stake in Western Midstream Partners, a publicly-traded master limited partnership that is engaged in the transportation and storage of oil and gas in the Rocky Mountains, North-central Pennsylvania, and Texas.
Anadarko Petroleum reports two segments.
The Exploration and Production segment (80% of revenue) manages Anadarko’s oil, NGL, and natural gas activities in the US, Algeria, and Ghana, plus the sale of those products. The company focuses majority of its activity on legacy assets like the Delaware and DJ basins, though it also plans to conduct new appraisals in the Powder River basin. In the Gulf of Mexico, the company continues an active deep-water development and exploration program.
Anadarko’s Midstream segment maintains gathering, processing, treating, transportation, and produced-water disposal assets to complement its oil and natural-gas production operations. It provides similar services for third-party customers. The company has some 30 gathering systems and 70 treating facilities adjacent to its E&P assets, which helps the company improve costs and control production schedule. Midstream accounts for some 20% of company sales.
Anadarko Petroleum's operations are in the US, Algeria, Ghana, and Mozambique. In the US, its properties are in the Gulf of Mexico, Wyoming, Colorado, Utah, Pennsylvania, Texas, and New Mexico. The company also has additional mineral rights on some 7.3 million acres in the US. Exploration acreages are in Canada, Colombia, Peru, and South Africa.
Some 80% of the company’s revenue comes from its US operations.
Sales and Marketing
Anadarko Petroleum sells oil under indexed market price contracts but also enters fixed-price and cost escalation-based agreements. The company’s Algerian and Ghanaian oil production is sold in the international market. The company's natural gas is often controlled by firm-transportation capacity (based on a shipper agreeing to purchase a specific amount of capacity). Anadarko also provides midstream services to third-party customers through various standard contracts like fixed-fee (payment amount does not depend on resources used or time expended), percent-of-proceeds (processors receive an agreed upon percentage of the actual proceeds of the sale), and keep-whole contracts (the processor retains the NGLs extracted and returns the processed natural gas or its equivalent value to the producer).
Anadarko Petroleum's revenue improved 12% to $13.3 billion for 2018. This was mainly due to increased drilling and completion activities at the Delaware and DJ basins, which bumped up oil sales volumes by 9%. Revenue has also surged due to improvements in realized oil prices, which have climbed in the last two years due to OPEC production cuts, Iranian output curtailment due to US sanctions, and declines in Venezuelan production. This marks a financial turnaround for the company, which saw revenue drop dramatically from $16.3 billion in 2014 to $8.4 billion in 2016 due to the commodity price downturn.
Anadarko posted $615 million in profit for 2018, the first positive net income in five years; the company posted a combined $11.9 billion in losses during the 2014-17 years. The turn in fortune came mostly on the back of a $2.1 billion reduction in exploration costs, plus a $500 million reduction in midstream expenses.
The company’s cash and cash equivalents fell by $3.2 billion, ending 2018 with $1.4 billion on hand. Cash from operations generated $5.92 billion, which was more than offset by $5.98 billion used in investing activities (mostly in purchase of property, plant, and equipment). Financing activities further depleted $228 million. A further $3.1 billion was spent in financing activities.
The commodity price downturn put a huge dent in Anadarko Petroleum's sales figures in recent years; it reported $12 billion in combined losses between 2014 and 2017. Hefty write-downs on natural gas asset values prompted a massive multi-year sell-off, including assets in Marcellus, Eagleford, West Chalk, Moxa, and Utah CBM.
The company plans to leverage its core assets like the Delaware and DJ basins, and the Gulf of Mexico, to improve cash-margins. About 70% of Anadarko’s $4.5 billion CAPEX budget for 2019 will flow into these properties. Beyond its legacy assets, Anadarko is also trying to expand its operations through a new LNG project in Mozambique, which has successfully signed several Sale and Purchase Agreements in Q1 2019 with Shell, Bharat Petroleum, and Tokyo Gas, among others.
These expansion project, however, face an operational drawback. Anadarko is in the middle of implementing a $5 billion share repurchase program as well a $2 billion debt-reduction program, which will necessitate a severely curtailed exploration budget until 2020.
A structural reorganization in 2018, whereby Anadarko’s midstream assets were transferred to its subsidiary Western Gas Partners, is expected to increase Anadarko’s yearly cash proceeds from that subsidiary.
Anadarko was initially set up as the gas exploration and production unit of the Panhandle Eastern Pipe Line Company in 1959. The plan was to take advantage of a ruling by the Federal Power Commission (now the Federal Energy Regulatory Commission) to set lower price ceilings for producing properties owned by pipeline companies. It was so successful over the next two decades that to realize shareholder value, Panhandle spun off Anadarko in 1986, separating its transmission and production businesses.
Since then, one of Anadarko's biggest purchases has been the 2006 acquisition of midstream operator Western Gas and fellow explorer Kerr-McGee for about $26 billion.
1201 LAKE ROBBINS DR
The Woodlands, TX 77380-1124
Phone: 1 (832) 636-1000
Employer Type: Publicly Owned
Stock Symbol: APC
Stock Exchange: , NYSE
EVP, Finance and Chief Financial Officer: Robert G. Gwin
EVP, Operations: Darrell E. Hollek
Chairman, President and CEO: R. A. Walker
Employees (This Location): 188
Employees (All Locations): 4,700
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