2015 APC Investor Conference Call Appendix · 2015 Anadarko Investor Conference Call Appendix. NYSE: APC | ... 640 724 727 Constitution 100% WI
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INVESTOR RELATIONS John Colglazier Senior Vice President 832/636-2306
Robin Fielder Director832/636-1462
Jeremy SmithDirector832/636-1544
NYSE: APC | www.anadarko.com
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
March 3, 2015
2015 Anadarko Investor Conference Call Appendix
NYSE: APC | www.anadarko.com
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
Enhancing Drilling Performance
U.S. Onshore: $8+ Billion Capital Savings Since 2009
2
$0
$1
$2
$3
$4
$5
$0
$500
$1,000
2009 2010 2011 2012 2013 2014
Bill
ions
$/Fo
ot
~$4.5 Billion Captured Completion Savings
$/Completed Foot Cumulative Savings
$0
$1
$2
$3
$4
$5
$0
$150
$300
2009 2010 2011 2012 2013 2014
Bill
ions
$/Fo
ot
~$3.8 Billion Captured Drilling Savings
$/Drilled Foot Cumulative Savings
Optimizing Completion Performance
NYSE: APC | www.anadarko.com
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
U.S. Onshore: Reducing Unit Costs & Increasing Liquids Mix
3
$3.67
$3.48$3.57
$3.06 $3.01 $3.02
20%
30%
40%
50%
$2
$3
$4
2009 2010 2011 2012 2013 2014
Liqu
ids
Com
posi
tion
LOE/
BO
E
LOE/BOE Liquids Composition
NYSE: APC | www.anadarko.com
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
1714
11 10
10,000
11,000
12,000
13,000
14,000
0
20
2011 2012 2013 2014
Avg
. MD
(Fee
t)
Day
s
Spud to Rig-Release Cycle TimeOptimizing Results Through Efficiencies
40+% Improvement in Drilling Cycle Time
Maximizing Recovery Through SpacingDrill 12 - 24 Wells per Section
Wattenberg: Continued Optimization Expands Resources
4
StructureTarget ZoneLateral LengthWell SpacingCompletion DesignProduction Management
1.0
2.0
0
2.5
2011EMidpoint
ExpandedWell
Opportunity
WellPerformance
DownspacingUpside
2015E
BB
OE
Expanding Net Resources
0
25
50
0 90 180
Cum
ulat
ive
Oil
(MB
O)
Days On Line
Enhanced Type-Well Performance
2013 2014
SCIENCE INCREASES CONFIDENCE
NYSE: APC | www.anadarko.com
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
~1 MMBOE EUR per Well30+% Liquids Composition~$7 Million Current Well Costs
Access to Premium Markets
East Texas/North Louisiana: Efficiency Gains Drive Returns
5
Henderson
Elm GroveHarrison
Marion
Gregg
Carthage
TEXA
S
LOU
ISIA
NA
Upshur
Rusk
De Soto
Caddo
Bossier
Red RiverPrimary Targets:HaynesvilleCotton ValleySEC
$0
$200
$400
$600
$800
0
20
40
60
80
2010 2011 2012 2013 2014 2015E
Mill
ions
MB
OE/
d
Predictable Sales Volumes
Volumes Net Capital
400
600
800
1,000
0
1,000
2,000
2011 2012 2013 2014M
MB
OE
Com
plet
ed L
ater
al
Leng
th ($
/Foo
t)
Enhancing Margins and Recoveries
Cost/Foot Average EUR
TEXAS
E. TEXAS/N. LOUISIANAGross Acres: ~300,000Net Acres: ~210,000
APC Acreage
2015 Planned ActivityOperate ~3 Rigs
Drill 30+ Wells
LA
Based on NYMEX strip oil prices as of 2/24/2015
0%
10%
20%
30%
40%
50%
$2 $3 $4
Ope
rate
d B
TAX
RO
R
Realized Gas Prices ($/Mcf)
Robust Returns
NYSE: APC | www.anadarko.com
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
1,000+ Identified Drilling Locations~300,000 BOE EUR per Well90+% Oil Composition
$442 Million Carry for 34% InterestExisting Midstream Infrastructure
Eaglebine: Short-Cycle Oil Opportunity
6
APC Acreage
Wells in Progress
Producing Wells
JV AMI
TEXAS
2015 Planned ActivityOperate ~1 Rig
Drill ~20 Wells
Robertson
Brazos
Milam
Burleson
Lee
5 Miles
EAGLEBINEGross Acres: ~150,000
Net Acres: ~92,000
0
350
700
1Q14 2Q14 3Q14
30-D
ay IP
(BO
PD)
Increased Well Performance
Core HBP Acreage Position
Most Recent Wells
NYSE: APC | www.anadarko.com
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
2015 Minimal Drilling Activity
Ramp Activity with Improved Differentials
~4,500 Identified Drilling Locations at Higher Natural Gas Prices
Marcellus: Massive Resource Option Value
7
NEW YORKPENNSYLVANIA
PotterTioga BradfordNon-Operated
Anadarko Operated
CentreClinton
Lycoming
Sullivan
20 Miles
0%
50%
100%
$2 $3 $4
BTA
X R
OR
Realized Natural Gas Price ($/Mcf)
Marcellus Returns
MARCELLUSGross Acres: ~654,000Net Acres: ~254,000
APC Acreage
PENNSYLVANIA
0
200
400
600
2009 2010 2011 2012 2013 2014 2015E
MM
cf/d
Net Sales Volumes
Core HBP Acreage Position
NYSE: APC | www.anadarko.com
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
Scalable DevelopmentInfrastructure in Place
Focus on Margins and EfficienciesLow Cost Operation $3.36/BOE
Large Remaining Inventory
Greater Natural Buttes: Predictable Delivery
8
0
5,000
10,000
$3 $4 $5 $5+
Loca
tions
Identified Drill Sites at Various Gas Prices
Note: Identified drilling locations with a positive NPV-10 at various NYMEX gas prices and constant service costs. Assumed 10% capital reduction.
$0.7
$0.9
$1.1
$1.3
4
6
8
10
2009 2010 2011 2012 2013 2014 2015E
Mill
ions
Day
s
Drilling Cycle-Time Improvement
Drilling Cycle Time Drilling Cost Per Well
GREATER NATURAL BUTTESNet Acres: ~196,000
APC Acreage
UTAH
2015 Planned ActivityOperate ~1 Rig
Drill ~60 Wells
25 Miles
Uintah County
UTAH
$0
$300
$600
0
100
2009 2010 2011 2012 2013 2014 2015E
Mill
ions
MB
OE/
d
Sales Volumes
Volumes Net Capital
NYSE: APC | www.anadarko.com
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
Minerals-Interest Ownership: Accelerating Value
9
WYOMING
COLORADO
Moxa Wamsutter
Anadarko’s Land Grant Position
UTAH
40 Miles
Wattenberg
Monell
CoalSoda Ash
APC Mineral Ownership Advantage
$1.1
$0.8
$1.9
Laramie County Economics Enhanced by Minerals-Interest Ownership
BTAX NPV-10 (Millions)
Based on NYMEX strip prices as of 2/24/2015
2014 Minerals-Interest Royalty Revenues~$675 Million Oil & Gas
~$100 Million Coal, Soda Ash & Other
APC Land GrantProducing FieldsHard Rock Minerals
LARAMIE COUNTY, WY200,000 Net Acres
Multi-Zone Oil Opportunity1,000+ BOE/d 24-Hour IP RatesMinerals-Interest Uplift Advantage
~8 Million Acres Concentrated
Minerals-InterestOwnership
APC Acreage
Drilled Wells
Laramie County
Silo Field
Hereford Field
WYOMINGCOLORADO
NYSE: APC | www.anadarko.com
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
Enables Asset Operational ControlEnsures Timely Well ConnectionsImproves Price Realizations
Midstream: Integrated with Upstream Activity
Large-Scale Operations~19,000 Miles Pipeline
~6 Bcf/d Throughput
3+ Bcf/d Processing Capacity
Front Range
OPPL
White Cliffs
GNB (MMcf/d)Year 2014ProcessingCapacity 970
Eagleford (MMcf/d)Year 2014ProcessingCapacity 200
Wattenberg (MMcf/d)Year 2014 2015EProcessingCapacity 875 1,175
Enterprise
Conway, KSNGL HUB
Cushing, OKWTI HUB
ChipetaLancaster
WattenbergPlatte Valley
Brasada
MAPL / Seminole
Delaware Basin (MMcf/d)Year 2014 2015EProcessingCapacity 425 625
Texas Express
ETC Mt. Belvieu, TXNGL HUB
0
3,000
6,000
9,000
$0
$400
$800
$1,200
2009 2010 2011 2012 2013 2014 2015E
MM
cf/d
Mill
ions
Midstream Asset-Level EBITDA*& Throughput Volumes
EBITDA Throughput
Processing Plant
Market Center
Oil Equity Pipeline
NGL Equity Pipeline
NGL Pipeline
10
*Includes WES EBITDANote: See appendix slides for non-GAAP financial measures
RamseyBonesMi Vida
NYSE: APC | www.anadarko.com
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
Caesar/Tonga 250 - 350 MMBOE Gross ResourcesLeveraged Infrastructure: $1 Billion Capital AvoidedFirst Oil Achieved in 20122 Planned Development Wells
K2Low-Risk, High-Margin, Oil OpportunitiesLeverage Existing InfrastructureRiser Gas Lift Project Approved2 Planned Development Wells
Caesar/Tonga & K2: High-Value GOM Assets
11
518
562561
606605
519
563
608
K2 Unit41.8% WI
Marco Polo100% WI
Ticonderoga50% WI
Tahiti
GREEN CANYON
771768
726
680
770
679 683
640
727724
Constitution100% WI
GULF OF MEXICOGross Acres: ~2.3 Million
Caesar/Tonga K2
GREEN CANYON
Caesar/Tonga33.75% WI
APC WI BlockSuccessful WellPlanned DrillingOil FieldProspectSaltSubsea Tieback
Warrior55% WI
NYSE: APC | www.anadarko.com
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
Increased Capability Reduces Days on Location2.5 Million Pound Hook Loads2 BOP Stacks with Dual Activity Capability
Upgraded Deepwater Rig Fleet Enhances Efficiency
12
Ocean BlackHornet
Noble Bob Douglas
Note: Excludes Spot Market Rigs
Rig Fleet 2015 2016 2017 2018 2019 2020
Ensco 8500
Ensco 8506
Belford Dolphin
Noble Bob Douglas*
Rowan Resolute*
Bolette Dolphin*
Ocean BlackHawk*
Ocean BlackHornet*
* Rigs with 2 BOP stacks and 2.5 million pound hook loads
NYSE: APC | www.anadarko.com
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
Significant Value CreationExcellent Transmissibility
High PermeabilityThick and Continuous ReservoirsLow Fluid Viscosity
2015 Appraisal WellUp-Dip and Northwest of Shenandoah-2
Shenandoah: Advancing Giant Discovery Toward Development
13
APC WI BlockAPC DiscoverySuccessful WellPlanned DrillingOil FieldSalt
GULF OF MEXICOGross Acres: ~2.3 Million
52 53
97
51
95WALKERRIDGE
Shenandoah30% WI
Shenandoah-4
Yucatan25% WI
A
A’
YUCATAN-1 YUCATAN-2 SHEN-1SHEN-3 SHEN-4SHEN-2
Cretaceous
Oligocene
Upper WilcoxLower Wilcox
Lower Miocene
A A’
Salt Shenandoah-3 ConfirmedDepositional ModelLateral Sand Continuity and QualityDown-Dip Thickening
• Found ~50% More Net SandProjected Oil-Water Contacts
Shenandoah-3Shenandoah-2
NYSE: APC | www.anadarko.com
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
Miocene Subsalt 3-Way Trap
Prolific Petroleum SystemHigh-Quality Reservoirs
~26,000 Feet TVD
Yeti: Drilling Under Way
GULF OF MEXICOGross Acres: ~2.3 Million
YETI BIGFOOT
Plio-Pleistocene
Mesozoic
Wilcox
Upper MioceneMM9
MM7
LM4MM4
A A’
Miocene
Salt
14
WALKERRIDGE
117
GREENCANYON Bigfoot
~300 MMBOE
Cascade~300 MMBOE
160159158157
Yeti37.5% WI
A’
A
APC WI BlockOil FieldProspectSaltIndustry Discovery
NYSE: APC | www.anadarko.com
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
Miocene Unconfined Fan System
Large Upside Potential
~15,000 Feet TVD
Opal: New Play Concept
15
DESOTO CANYON
Miocene Reservoir
808 809
852 853 854
897 898
942
A
A’
Opal50% WI
855
899 900
OPAL-1
Jurassic
A’
Cretaceous
BasementSource Rocks
Migration Pathway
Salt
Jurassic
A
APC WI BlockPlanned DrillingProspectShale-Filled Channel
GULF OF MEXICOGross Acres: ~2.3 Million
NYSE: APC | www.anadarko.com
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
Subsalt 3-Way TrapProlific Miocene Sand Fairway~30,500 Feet TVD
Thorvald: Opportunity in Proven Area
16
MISSISSIPPICANYON
Kodiak~60 MMBOE
Tubular Bells~150 MMBOE
Kaikias~75 MMBOE Thorvald
50% WI
Gunflint~60 MMBOE
814
APC WI BlockPlanned DrillingOil FieldProspectSaltIndustry Discovery
A’
ATHORVALD-1 KODIAK POSEIDON TUBULAR BELLS
Oligocene
UM1
MM9
MM7
Mesozoic
Plio-Pleistocene
Top Miocene
Miocene Sand-Rich Interval
Source Interval
A’A
Salt
PayInterval
GULF OF MEXICOGross Acres: ~2.3 Million
NYSE: APC | www.anadarko.com
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
Planned Paon Appraisal Well and DSTEvaluating Development OptionsPotential for Fast-Track Development
Maturing CI-528/529 ProspectsExploration Well Planned
Ivorian Basin: Advancing Paon Commerciality
17
AFRICA
CÔTE D’IVOIREGross Acres: ~1.3 Million
Paon 2A
CI 52990%WI
CI 52890%WI
CI 10365%WI
10 miles16 km
CÔTE D’IVOIRE
Paon-1X
Paon-3ARPaon-4A
Paon-5A
APC WI BlockAPC DiscoverySuccessful WellPlanned DrillingOil FieldProspects/Leads
Commercializing PaonEstablished Oil-Water ContactVerified Lateral Sand Continuity Reduced UncertaintyDST and Offset MonitoringCommercial NegotiationsTransition to Development
NYSE: APC | www.anadarko.com
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
Premier Acreage Position Geologic Setting Similar to MozambiqueOil Potential
2015 Drilling ProgramKronos: Large 3-WayCalasu: Multi-Target 4-WayMaturing Follow-On ProspectsLarge Resource Potential
Grand Col AreaPlanned 3D Seismic Acquisition
Colombia: Drilling Under Way in Frontier Basin
18
COLOMBIAGross Acres: ~16 Million
GRAND FUERTEAREA50% WI
Calasu
GRAND COL AREA
100% WI
SOUTHAMERICA
COLOMBIA
CALASU
Reservoir
KRONOS
50 miles80 km
Kronos
APC WI BlockPlanned DrillingProspects/LeadsSeismic
A’A B’B
A’
A
B’
B
NYSE: APC | www.anadarko.com
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
High-Quality Reservoir Sand Development
Established Working Petroleum System
Multiple Large Traps Remain Untested
Drill Mlima: ~30,000-Acre 4-Way
Kenya: Applying Learnings to New Activity
19
KIBOKO-1MLIMA-1MPAKA
30 miles48 km
MbawaDiscovery
L-1245% WI
L-11A45% WI
L-11B45% WI
L-0745% WI
L-0545% WI
Mlima
Mpaka
Kubwa
Kiboko
KENYA AFRICA
KENYAGross Acres: ~5.6 Million
A
A’
A A’
APC WI BlockPlanned DrillingGas FieldProspects/LeadsIndustry Discovery
Basement
PossibleSource Rock
PossibleSource Rock
A A’
NYSE: APC | www.anadarko.com
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
Canterbury Basin: ~4 Million AcresIncorporating Drilling Results3D Seismic Under Way
Pegasus Basin: ~2 Million Acres
New Caledonia Basin: ~36 Million AcresPetroleum Prospecting PermitPlanned 2D and Multi-Beam Bathymetry
New Zealand
20
NEW ZEALANDGross Acres: ~42 Million
AUSTRALIA
NEW ZEALAND
APC WI BlockProspect/LeadsSeismic
PEGASUS BASIN100% WI
NEWZEALAND
NEW CALEDONIA BASIN25% WI
CANTERBURY BASIN45% WI
Caravel25 miles40 km
NYSE: APC | www.anadarko.com
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
Glossary of Terms
21
EqualizedProduct Mix or
Increase in Liquids?
M: ThousandsMD: Measured Depth MM: MillionsMTA: Mahogany, Teak, AkasaNGL: Natural Gas LiquidsNPV: Net Present ValueNYMEX: New York Mercantile ExchangePHA: Production-Handling AgreementPK0: Point Kilometrique 0 PSI: Pounds per Square InchROR: Rate of ReturnRR: Rig ReleaseS&P: Standard & Poor’sT: TrillionTEN: Tweneboa, Enyenra, NtommeTPA: Tonnes per AnnumTRIR: Total Recordable Incident RateTVD: True Vertical Depth YE: Year EndYOY: Year over YearWES: Western Gas Partners, LPWGP: Western Gas Equity Partners, LP WI: Working InterestWTI: West Texas Intermediate
AMI: Area of Mutual Interest Avg.: AverageAXPC: American Exploration and Production CouncilB: BillionBbl: BarrelBBl/d: Barrels of Liquid per DayBO: Barrel of OilBOE: Barrel of Oil Equivalent BOE/d: Barrel of Oil Equivalent per DayBOPD: Barrels of Oil per DayBTAX: Before Tax cf: Cubic Feet of Natural Gascf/d: Cubic Feet per DayCI: Côte d'IvoireCPF: Central Processing Facility DST: Drill Stem TestE&P: Exploration and Production EBITDA: Earnings Before Interest, Tax, Depreciation and AmortizationEBITDAX: Earnings Before Interest, Tax, Depreciation, Amortization and Exploration Expense EUR: Estimated Ultimate RecoveryEV: Enterprise ValueF&D: Finding and Development Cost
FCF: Free Cash FlowFEED: Front-End Engineering DesignFID: Final Investment DecisionFPSO: Floating Production Storage and Offloading UnitFt: FeetG&G: Geology and Geophysics GAAP: Generally Accepted Accounting PrinciplesGNB: Greater Natural ButtesGOM: Gulf of MexicoGP: General Partner HBNS: Hassi Berkine Sud (South) HBP: Held by ProductionHOA: Heads of AgreementHP: HorsepowerHSE: Health, Safety and Environment HZ: HorizontalIP: Initial Production RateIPA: Independent Producers of AmericaJV: Joint VentureKm: KilometersLNG: Liquefied Natural GasLOE: Lease Operating ExpenseLP: Limited Partnership
NYSE: APC | www.anadarko.com
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
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.
Non-GAAP Financial Measure Definitions & Reconciliations
22
NYSE: APC | www.anadarko.com
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
Adjusted EBITDAX (EBITDAX)The Company defines Adjusted EBITDAX as income (loss) before income taxes; 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
Year Ended December 31, 2014Millions
Income (loss) before income taxes (GAAP) 54Exploration expense 1,639DD&A 4,550Impairments 836Interest Expense 772Total (gains) losses on derivatives, net, less net cash received in settlement of commodity derivatives 578Deepwater Horizon settlement and related costs 97Algeria exceptional profits tax settlement --Tronox-related contingent loss 4,360Certain other nonoperating items 22Less net income attributable to noncontrolling interests 187Consolidated adjusted EBITDAX (Non-GAAP) 12,721
23
NYSE: APC | www.anadarko.com
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 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
Net Debt to Adjusted Capitalization Ratio December 31, 2014
MillionsAnadarko
ConsolidatedWGP*
Consolidated
Anadarko excluding
WGPTotal debt (GAAP) $ 15,092 $ 2,423 $ 12,669
Less cash and cash equivalents 7,369 67 7,302Net debt (Non-GAAP) $ 7,723 $ 2,356 $ 5,367
MillionsAnadarko
Consolidated
Anadarko excluding
WGPNet debt $ 7,723 $ 5,367
Total Equity 22,318 19,725Adjusted Capitalization (Non-GAAP) $ 30,041 $ 25,092
Net debt to adjusted capitalization ratio 26% 21%
*Western Gas Equity Partners, LP (WGP) is a publicly traded consolidated subsidiary of Anadarko and WES is a consolidated subsidiary of WGP 24
NYSE: APC | www.anadarko.com
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
Discretionary Cash Flow from Operations, Free Cash Flow and Adjusted Free Cash FlowThe Company defines discretionary cash flow from operations as net cash provided by operating activities before collections associated with the Algeria exceptional profits tax settlement, changes in accounts receivable, changes in accounts payable and accrued expenses, other items-net, certain nonoperating and other excluded items, and current taxes related to asset monetizations.
The Company defines free cash flow as discretionary cash flow from operations less capital expenditures and the company defines adjusted free cash flow as defined above adjusted for the cash received from the Algeria Exceptional Profits Tax settlement. Also, the company defines Anadarko free cash flow as adjusted free cash flow excluding WES capital investments.
Management uses 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. Management uses free cash flow to demonstrate the Company's ability to internally fund capital expenditures and to service or incur additional debt.
Non-GAAP Reconciliation
Year Ended $ Millions December 31, 2014Net cash provided by operating activities (GAAP) 8,466
Add back:
Algeria exceptional profits tax settlement --
Increase (decrease) in accounts receivable (103)
Increase (decrease) in accounts payable and accrued expenses (7)
Other items – net 81
Certain nonoperating and other excluded items 29
Current taxes related to asset monetizations 938
Discretionary cash flow from operations (Non-GAAP) 9,404 Less: Anadarko capital expenditures 8,560
Anadarko adjusted free cash flow (Non-GAAP) 844
25
NYSE: APC | www.anadarko.com
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
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
*Includes Western Gas Partners, LP (WES) capital expenditures of $696 million for the year ended December 31, 2014
Total Costs Incurred for the Year Ended December 31, 2014 ($ MM) 8,712
Asset Retirement Obligation Liabilities Incurred ($ MM) (347)
Cash Expenditures for Asset Retirement Obligations ($ MM) 443
Oil and Natural Gas Exploration and Development Costs ($ MM) 8,808
Non-Price-Related Additions before Divestitures (MMBOE) 503
Finding & Development Costs ($/BOE) 17.51
Additions Including Price-Related Revisions (MMBOE) 502
Finding & Development Costs Including Price-Related Revisions ($/BOE) 17.55
26
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