10:46 DJS Anadarko Makes 'Major' Oil Find In Gulf Of Mexico, Posts Earnings
10:46 DJS Anadarko Makes 'Major' Oil Find In Gulf Of Mexico, Posts Earnings
HOUSTON -(Dow Jones)- Anadarko Petroleum Corp. Wednesday said it made a
"major" oil and gas discovery at an exploration well in the Gulf of Mexico.
The discovery helped soften the blow of disappointing second-quarter earnings,
which were hurt by the drop in oil prices.
The oil and gas company said the new well is in the Tanzanite field,
about 75 miles off the cost of Louisisana at Eugene Island South Addition
Block 346.
Seismic data indicates a reservoir of about 1,000 acres, which Anadarko
said it believes has at least 140 million energy equivalent barrels of
reserves. If the well bears out, it would add significantly to Anadarko's
proved reserves, which stood at 708 million energy equivalent barrels at the
end of 1997.
Anadarko has a 100% working interest in the Tanzanite Field.
The discovery prompted Gerard Klauer Mattison & Co. analyst Robert
Christensen to upgrad his rating on Anadarko to "buy" from "hold." Christensen
said the Tanzanite well could add nearly $7 a share to the company's net asset
value.
"And there's more to come," Christensen said, noting the oil and gas
company is drilling at least six other promising wells around the world.
The analyst also said the recent pullback in Anadarko's share price
provides a good buying opportunity.
While maintaining current earnings estimates, he set a 12-month price
target on the stock of $40; late Wednesday morning, the shares (APC) were up
$3.50, or 12%, at $33.24.
Earlier Wednesday, the company posted second-quarter net income of $4.3
million, or two cents a share. That fell below the mean estimate of analysts,
who had expected the company to earn five cents a share.
A year ago, the company earned $13.8 million,, or 11 cents a share.
Per-share figures reflect 2-for-1 stock split effective July 1.
Revenue slipped 1% to $137.6 million in the latest quarter.
Anadarko said "significantly" lower oil prices and lower natural gas
volumes hurt earnings, but those were partially offset by higher oil
production volumes. However, higher costs and expenses, higher interest
expense and preferred stock dividends also hurt earnings.
Anadarko said it hasn't cut its 1998 planned capital investment program
of about $800 million, but it has shifted spending programs to take greater
advantage of stronger natural gas prices and deferred into next year some oil
drilling programs in west Texas.
The company expects many of the projects under way in the first half of
1998 to deliver "significantly" higher volumes in the third and fourth
quarters.
Anadarko also said its exploration and development drilling programs
are on track to produce the best operating results in its history. The company
said its best annual operating results came in 1997 when it posted a reserve
replacement ratio of 341% and added proved reserves of 151 million energy
equivalent barrels.
At the end of the first quarter the company had replaced 240% of its
expected production for 1998, and at the end of June it had produced 22.6
million energy equivalent barrels.
In the second quarter of 1998, Anadarko's oil volumes rose 19% to 2.7
million barrels, or 29,000 barrels a day, compared with 2.2 million barrels,
or 25,000 barrels a day a year ago.
Anadarko's U.S. average oil prices fell 34% in the latest quarter to
$11.50 a barrel from $17.48 a barrel a year ago.
Natural gas production during the latest quarter was 42.2 billion cubic
feet of gas, or 463 million cubic feet a day, compared with gas production of
43.8 billion cubic feet, or 481 million cubic feet a day, a year ago.
Anadarko's natural gas liquids sales volumes rose 52% to 1.6 million
barrels, or 17,000 barrels a day, compared with 1 million barrels, or 11,000
barrels a day a year ago.
Higher volumes were partly offset by 19% lower prices for natural gas
liquids. Prices averaged $10.90 a barrel in the latest quarter, compared with
$13.45 a barrel a year earlier.
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07/29 10:46a CDT
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