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w w w . a n a d a r k o . c o m | N Y S E : A P C
A N A D A R K O P E T R O L E U M C O R P O R A T I O N
JOHN COLGLAZIERSenior Vice President
832 636 2306
JEREMY SMITHDirector
832 636 1544
SHANDELL SZABODirector
832 636 3977
I N V E S T O RR E L A T I O N S
APPENDIX
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Differentiating Capital Allocation & Portfolio Management
$0
$5
$10
$15
Bill
ions
GOM
2011 2012 2013 2014 2015 2016E$0
$5
$10
$15
Bill
ions
U.S. Onshore (E&P Only)
2011 2012 2013 2014 2015 2016E$0
$5
$10
$15
Bill
ions
International
2011 2012 2013 2014 2015 2016E
-$4
$0
$4
$8
$12
Bill
ions
Total Company
Adj. DCF Monetizations TPE Capital DWH/TRX Adj. FCF (Cumulative) Adj. FCF (CumulativeIncluding DWH/TRX)
2011 2012 2013 2014 2015 2016E
EBITDAX Monetizations TPE Capital Adj. FCF (Cumulative)** Based on consensus prices as of 3/11/2016: WTI $39.50/Bbl and HH $2.50/McfNote: EBITDAX excludes corporate G&A; see Appendix for non-GAAP definitions
* Based on consensus prices as of 3/11/2016: WTI $39.50/Bbl and HH $2.50/McfNote: See Appendix for non-GAAP definitions and reconciliations
w w w . a n a d a r k o . c o m | N Y S E : A P C A N A D A R K O P E T R O L E U M C O R P O R A T I O NA N A D A R K O P E T R O L E U M C O R P O R A T I O Nw w w . a n a d a r k o . c o m | N Y S E : A P C
Anticipate Periodic TransactionsWES Independently Funds Significant Midstream ExpansionsProvides Visible Cash Source
$0
$400
$800
$1,200
2008 2009 2010 2011 2012 2013 2014 2015 2016E**
Mill
ions
$5+ Billion Returned to Anadarko*
Distributions Asset Sales to WES WGP Monetizations
19
WES & WGP: $11+ Billion Value for Anadarko~$6 BILLION*
LP UNIT VALUE OWNED BY ANADARKO
~35% LP**~2% GP
~84%LP**
Western GasPartners, LP
Anadarko
Western GasEquityPartners, LP
NYSE:WGP
NYSE:WES
~8%LP**
GP
* As of 3/11/2016** Fully diluted. Assumes outstanding Tangible Equity Units (NYSE: AEUA) convert to 7.9 million WGP Common Units
w w w . a n a d a r k o . c o m | N Y S E : A P C A N A D A R K O P E T R O L E U M C O R P O R A T I O NA N A D A R K O P E T R O L E U M C O R P O R A T I O Nw w w . a n a d a r k o . c o m | N Y S E : A P C
U.S. Onshore: Reducing Activity to Preserve Value
D E L A W A R E B A S I NP L A N N E D A C T I V I T Y
2015~7 Rigs
~2 Frac Crews
2016E~4 Rigs
~1 Frac CrewN E T S A L E S V O L U M E S
2015
32MBOE/d
2016E
40 - 42MBOE/d
E A G L E F O R DP L A N N E D A C T I V I T Y
2015~4 Rigs
~3 Frac Crews
2016ENo Rigs
~1 Frac CrewN E T S A L E S V O L U M E S
2015
85MBOE/d
2016E
71 - 73MBOE/d
E . T X / N . L AP L A N N E D A C T I V I T Y
2015~3 Rigs
~1 Frac Crew2016ENone
N E T S A L E S V O L U M E S
2015
57MBOE/d
2016E
48 - 50MBOE/d
M A R C E L L U SP L A N N E D A C T I V I T Y
2015None
2016ENone
N E T S A L E S V O L U M E S
2015
75MBOE/d
2016E
68 - 70MBOE/d
D J B A S I NP L A N N E D A C T I V I T Y
2015~7 Rigs
~3 Frac Crews
2016E~1 Rig
~2 Frac CrewsN E T S A L E S V O L U M E S
2015
224MBOE/d
2016E
225 - 228MBOE/d
G R E A T E R N A T U R A L B U T T E S
P L A N N E D A C T I V I T Y
2015~1 Rig
~1 Frac Crew2016ENone
N E T S A L E S V O L U M E S
2015
69MBOE/d
2016E
62 - 65MBOE/d
Note: Planned activity represents operated activity only
20
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Midstream: Integration with Upstream Creates ValueEnables Asset Operational ControlEnsures Timely Well ConnectionsImproves Price RealizationsLeverages Third-Party Commitments
$0
$400
$800
$1,200
2009 2010 2011 2012 2013 2014 2015 2016E
Mill
ions
Midstream Asset-Level EBITDA*
Processing PlantMarket CenterOil Equity PipelineNGL Equity PipelineNGL Pipeline*Includes WES EBITDA
FRONT RANGE
OPPL
WHITE CLIFFSSADDLEHORN
ENTERPRISE
Conway, KSNGL HUB
Cushing, OKWTI HUB
ChipetaLancaster
WattenbergPlatte Valley
COSF
Brasada
MAPL / SEMINOLE
TEXAS EXPRESS
ETC
Mt. Belvieu, TXNGL HUBRamsey
BonesMi Vida
Note: See Appendix for non-GAAP definitions
EAGLEFORDProcessing Capacity 200 MMcf/d
DELAWARE BASINProcessing Capacity 625 MMcf/d
2016E Additional Capacity 400 MMcf/d
GREATER NATURAL BUTTES
Processing Capacity 980 MMcf/d
DJ BASINProcessing Capacity 1,175 MMcf/d
Y E A R - E N D 2 0 1 5
P I P E L I N E S T H R O U G H P U T G A T H E R I N G P R O C E S S I N GC A P A C I T Y
~18,000Miles
5+Bcf/d
~350MBOPD
~4Bcf/d
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Best-In-Class Project Management Delivers ValueLucius at Full CapacityHeidelberg Achieved First Oil 1Q16Caesar/Tonga Adding Incremental Oil VolumesMozambique LNG Development Advancing
DESIGN ONE: BUILD TWO
LUCIUSSanction to First Production: 3 Years
HEIDELBERGSanction to First Production: 3 Years
2015
Fast/High-cost
Fast/Low-cost
Slow/High-cost
Slow/Low-cost
1.00
Sche
dule
Per
form
ance
1.00Facilities Cost Performance
2015 IPA BENCHMARKING STUDY*
*IPA – Independent Project Analysis consortium ranks world-wide project performance
Industry Norm*
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Upgraded Deepwater Rig Fleet Enhances Efficiency
R I G F L E E T 2016 2017 2018 2019 2020
Noble Bob Douglas
Rowan Resolute
Bolette Dolphin
Ocean BlackHawk
Ocean BlackHornet
Ocean BlackHornet
Noble Bob Douglas
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Mozambique LNG: Reducing UncertaintyEnormous Recoverable Resources ~75 Tcf in Offshore Area 1 Scalable Onshore Development to 50+ MMTPA
Attractive Cost Advantages Close Proximity to Shore Natural Harbor Direct Subsea to Shore Development High Well Deliverability Access to Premium Asian Markets
Advantaged Economics 12 MMTPA for Cost of 10 MMTPA 20-Year Offtake Non-Binding HOAs Pricing Mechanism Protects Economics
Financially Derisked $2.1 Billion Monetization Net Proceeds Material Project Financing Available
APC WI BlockNatural Gas Field
M O Z A M B I Q U EGross Acres: 1+MM
A F R I C A
MOZAMBIQUE
AREA 1
10 MILES16 KMS
17,000-ACRE LNG FACILITY SITE
GOLFINHO/ATUM
PROSPERIDADE
ORCA
TUBARÃO
TUBARÃO TIGRE
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Gulf of Mexico: Positioned for Continued Success
25
TAHITICONSTITUTION
INDEPENDENCE HUB
BOOMVANG
NANSEN GUNNISON
CONGER
POWER PLAY
BLIND FAITH
K2 COMPLEX
Phobos
LUCIUS
BALDPATE
Shenandoah
Warrior
K E A T H L E Y C A N Y O N
S I G S B E E E S C A R P M E N T
793 794
877
918
Hadrian SouthGas Field
82 83
41
84
39 40
874
920919
876875
Lucius Unit24% WI
3 MILES
Lucius
Phobos Discovery30% WI
P H O B O S1 Appraisal Well
Potential Tieback to Lucius
G R E E N C A N Y O N
Marco Polo 3 MILES
518
562561
606605
519
563
608
Warrior 55 WI%
K2 Unit 42% WI
607
W A L K E R R I D G E
5251 53
139 143141 142
SHENANDOAH BASIN
Yucatan25% WI
Coronado60+% WI
95 999897
3 MILES
Shenandoah30% WI
S H E N A N D O A H B A S I N2 Appraisal Wells
Evaluating Development Options
W A R R I O R1 Exploration Well
Potential Tieback to Marco Polo
G U L F O F M E X I C OGross Acres: ~1.6 Million
Lease Blocks: 279 Gross/160 Net
APC WI BlockAPC WI FacilitiesOil FieldProspect Area
APC DiscoverySuccessful WellPlanned DrillingSubsea Tieback/Future Tieback
38
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Côte d’Ivoire: Progressing Toward CommercialityAdvancing Paon Drilling Paon-5A Perform DST
Drill Pelican-1XDrill Rossignol-1XEvaluating Development OptionsPromoting Interest
C Ô T E D ’ I V O I R EGross Acres: ~1MM
A F R I C A
CI‐52990% WI
CI‐52890% WI
CI‐10365% WIPaon-1X
Paon-3AR
CI‐52790% WI
Paon-4A
CÔTE D’IVOIREPaon-5A
Pelican-1XRossignol-1X
10 MILES16 KMS
APC WI BlockAPC DiscoverySuccessful WellPlanned DrillingOil FieldProspects/Leads
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GRAND FUERTE (50% WI)
Colombia: Opportunity Rich
Kronos Discovery Confirmed Working Petroleum System
Plan to Drill Purple Angel-1
Grand COL Phase I 3D Seismic On Schedule and Under Budget
Grand COL Phase II 3D Seismic Commenced 1Q16
27
C O L O M B I AGross Acres: ~16MM
COLOMBIA
GRAND COL
GRAND FUERTE
COL 5
URA 4
PURPLEANGEL
FUERTENORTE
FUERTESUR
50 MILES80 KM
50 MILES80 KM
Purple Angel-1
Kronos-1
APC WI BlockAPC DiscoveryPlanned DrillingGas FieldProspects/Leads
GRAND COL (100% WI)
3D Phase II13,000 km2
(2016)
COL 7
COL 2
COL 6
COL 13D Phase I16,300 km2
(2015)
SOUTHAMERICA
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Non-GAAP Financial Measure Definitions & Reconciliations
This list of non-GAAP financial measure definitions and related reconciliations is intended to satisfy the requirements of Regulation G of the Securities Exchange Act of 1934, as amended. This information is historical in nature. Anadarko Petroleum Corporation (the “Company”) undertakes no obligation to publicly update or revise any non-GAAP financial measure definitions and related reconciliations. The following slides include reconciliations of GAAP to non-GAAP financial measures and statements indicating why management believes the non-GAAP financial measures provide useful information for investors. Non-GAAP financial measures provided in this presentation for specific areas are calculated using the same methodology.
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Adjusted EBITDAX (EBITDAX)The Company defines Adjusted EBITDAX as income (loss) before income taxes; gains (losses) on divestitures, net; exploration expense; depreciation, depletion, and amortization; impairments; interest expense; total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives; and certain items not related to the Company’s normal operations, less net income attributable to noncontrolling interests. During the periods presented, items not related to the Company’s normal operations included Deepwater Horizon settlement and related costs, Algeria exceptional profits tax settlement, Tronox-related contingent loss, and certain other nonoperating items included in other (income) expenses, net.
Management believes that the presentation of Adjusted EBITDAX provides information useful in assessing the Company’s financial condition and results of operations and that Adjusted EBITDAX is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures, and make distributions to stockholders.
Adjusted EBITDAX as defined by Anadarko may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) attributable to common stockholders and other performance measures prepared in accordance with GAAP, such as operating income or cash flows from operating activities. Adjusted EBITDAX has important limitations as an analytical tool because it excludes certain items that affect net income (loss) attributable to common stockholders and net cash provided by operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Anadarko’s results as reported under GAAP.
Non-GAAP Reconciliation
29
Year Ended December 31, 2015Millions
Income (loss) before income taxes (GAAP) $ (9,689)(Gains) losses on divestitures, net 1,022 Exploration Expense 2,644DD&A 4,603 Impairments 5,075 Interest Expense 825Total (gains) losses on derivatives, net, less net cash received in settlement of commodity derivatives 235Other operating expense 74 Tronox-related contingent loss 5 Certain other nonoperating items 22Less net income attributable to noncontrolling interests (120) Consolidated adjusted EBITDAX (Non-GAAP) $ 4,936
w w w . a n a d a r k o . c o m | N Y S E : A P C A N A D A R K O P E T R O L E U M C O R P O R A T I O N
Net Debt to Adjusted Capitalization Ratio December 31, 2015
MillionsAnadarko
ConsolidatedWGP*
ConsolidatedAnadarko
excluding WGPTotal debt (GAAP) $ 15,751 $ 2,707 $ 13,044
Less cash and cash equivalents 939 100 839Net debt (Non-GAAP) $ 14,812 $ 2,607 $ 12,205
MillionsAnadarko
ConsolidatedAnadarko
excluding WGPNet debt $ 14,812 $ 12,205
Total Equity 15,457 12,819Adjusted Capitalization (Non-GAAP) $ 30,269 $ 25,024
Net debt to adjusted capitalization ratio 49% 49%
Net Debt to Adjusted CapitalizationThe Company defines net debt as total debt less cash and cash equivalents. Net debt for Anadarko excluding Western Gas Equity Partners, LP (WGP) is Anadarko’s Consolidated net debt, less WGP’s net debt.
The Company defines net debt to adjusted capitalization ratio as net debt / (net debt + total equity). Net debt to adjusted capitalization ratio for Anadarko excluding WGP excludes WGP’s net debt and noncontrolling interest attributable to WGP.
Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by cash and cash equivalents on hand.
Non-GAAP Reconciliation
30
*WGP is a publicly traded consolidated subsidiary of Anadarko and Western Gas Partners, LP (WES) is a consolidated subsidiary of WGP
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Adjusted Discretionary Cash Flow from Operations (Adjusted DCF)The Company defines adjusted discretionary cash flow from operations as net cash provided by (used in) operating activities adjusted by changes in accounts receivable, changes in accounts payable and accrued expenses, other items - net, Deepwater Horizon and Tronox settlement payments, collections associated with the Algeria exceptional profits tax settlement, certain nonoperatingand other excluded items, current taxes related to Tronox tax position, and WES/WGP distributions to third parties. Management uses adjusted discretionary cash flow from operations because it is useful in comparisons of oil and gas exploration and production companies as it excludes certain fluctuations in assets and liabilities and current taxes related to certain items affecting comparability.
Adjusted Free Cash Flow (Adjusted FCF)The Company defines adjusted free cash flow as adjusted discretionary cash flow from operations less capital expenditures excluding WES and cash received from the Algeria Exceptional Profits Tax settlement and monetizations. Management uses adjusted free cash flow to demonstrate the Company's ability to fund capital expenditures and to service or incur additional debt.
Non-GAAP Reconciliation
31
Year Ended December 31,millions 2011 2012 2013 2014 2015Net cash provided by (used in) operating activities (GAAP) $ 2,505 $ 8,339 $ 8,888 $ 8,466 $ (1,877)Adjusted by:
Increase (decrease) in accounts receivable 993 (520) 11 (103) 2 Increase (decrease) in accounts payable and accrued expenses (284) 476 (150) (97) 995
Other items – net 16 (126) (146) 71 (772)Deepwater Horizon / Tronox settlement payments 3,948 (6) - - 5,215
Algeria exceptional profits tax settlement - (1,006) (730) - -Certain nonoperating and other excluded items - - 160 119 96
Current taxes related to Tronox tax position - - - - 910
WES/WGP distributions to third parties (79) (107) (158) (216) (280)Adjusted discretionary cash flow from operations (Non-GAAP) $ 7,099 $ 7,050 $ 7,875 $ 8,240 $ 4,289 Adjusted by:
Capital expenditures excluding WES* (6,114) (6,782) (7,731) (8,560) (5,363)
Collection of Algeria exceptional profits of tax receivable - 1,006 730 - -Monetizations 580 1,244 1,033 5,659 1,825
Adjusted free cash flow (Non-GAAP) $ 1,565 $ 2,518 $ 1,907 $ 5,339 $ 751
* WES capital expenditures 439 529 792 696 525
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Finding and Development CostsThe Company defines finding and development (F&D) costs as total costs incurred divided by reserve additions. In addition, the Company will use several variations of this calculation, including isolating development costs and incorporating price-related and non-price-related reserve additions.
Management believes that the presentation of F&D costs provides useful information in assessing the Company’s ability to efficiently manage its capital programs.
Non-GAAP Reconciliation
32
* NM: Not Meaningful
Year Endedmillions December 31, 2015
Costs incurred $ 5,753 Asset retirement obligation liabilities incurred (207)Cash expenditures for asset retirement obligations 298
Oil and natural gas exploration and development costs $ 5,844
Non-price related additions before divestitures (MMBOE) 407
Finding and development costs ($/BOE) $ 14.36
Additions including pre-related revisions (MMBOE) (216)
Finding & development costs including price-related revisions ($/BOE) NM *
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Glossary of TermsLP: Limited PartnershipM: ThousandsMM: MillionsNGL: Natural Gas LiquidsNYSE: New York Stock ExchangePK0: Point Kilometrique 0 PRB: Powder River BasinROR: Rate of ReturnS&P: Standard & Poor’sSLE: Short Lateral EquivalentT: TrillionTEN: Tweneboa, Enyenra, NtommeTPA: Tonnes per AnnumTPE: Exceptional Profits TaxTRX: TronoxYE: Year EndYOY: Year over YearYTD: Year to DateWES: Western Gas Partners, LPWGP: Western Gas Equity Partners, LP WI: Working InterestWTI: West Texas Intermediate
Adj: AdjustedAPC: Anadarko Petroleum Corp.B: BillionBbl: BarrelBBl/d: Barrels of Liquid per DayBOE: Barrel of Oil Equivalent BOE/d: Barrel of Oil Equivalent per DayBOPD: Barrels of Oil per DayBTAX: Before Tax CBM: Coalbed Methanecf: Cubic Feet of Natural Gascf/d: Cubic Feet per DayCPF: Central Processing Facility DCF: Discretionary Cash FlowDC&E: Drill, Complete and EquipDD&A: Depreciation, Depletion and AmortizationDJ: Denver JulesburgDST: Drill Stem TestDWH: Deepwater HorizonE&P: Exploration and Production EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization
EBITDAX: Earnings Before Interest, Tax, Depreciation, Amortization and Exploration Expense EOR: Enhanced Oil RecoveryF&D: Finding and Development CostFCF: Free Cash FlowFID: Final Investment DecisionFPSO: Floating Production Storage and Offloading UnitGAAP: Generally Accepted Accounting Principles G&A: General and AdministrativeGOM: Gulf of MexicoGP: General Partner HBNS: Hassi Berkine Sud (South) HH: Henry HubHOA: Heads of AgreementIDUCs: Intentionally Deferred CompletionsIPA: Independent Producers of AmericaKm: KilometersLNG: Liquefied Natural Gas
33