Anadarko posts $1.25B loss, to cut 2016 spending in half
Monday February 1, 2016
Special charges, including after-tax impairments on the company's producing properties and its exploration assets, totaled $954 million. Its loss of $1.25 billion, or $2.45 a share, in the October-December period, compared to a loss of $395 million, or 78 cents a share, in the same period the year before. Revenues sank 77 percent to $2.1 billion.
Anadarko CEO Al Walker said the oil explorer's decision last year not to expand its drilling program while energy prices languished paid off because oil and gas markets haven't yet recovered.
We did not expect oil prices to recover in 2015 and believed it could take well into 2016 before markets would stabilize on a sustained basis,†Anadarko CEO Al Walker in a written statement. Value enhancement drove our capital-allocation philosophy.â€
The company said it expects to spend $2.8 billion in capital this year, about 50 percent lower a deeper spending cut than last year. The firm had cut its capital budget 40 percent in 2015.
Greater market dislocation appears likely,†Walker said. The need to again materially lower our capital spending, while continuing to pursue value creation and preservation, is our best course of action.â€
The capital budget cuts would bring its 2016 spending down 70 percent compared to 2014. Walker said the company became more efficient last year, and spent $500 million less on overhead, all the while boosting oil production by 25,000 barrels a day. It sold off $2 billion in assets.
Last year, the firm said, it spent more of its budget on big deep-water projects and exploration considered long-term cash cycle projects that take a lot more time to develop than onshore U.S. shale plays, which have quick bursts of production at first but rapidly deteriorate if investments decline.
In the United States, Anadarko concentrated on its prized Wattenberg field in Colorado. It cut its drilling costs per foot in half and brought down well-stimulation costs about a third, but output increased 30 percent. It also improved results in the Delaware Basin in West Texas. Its Lucius spar came online in the Gulf of Mexico this time last year and its Heidelberg spar was brought into production this month.