Anadarko Cuts Spending in Effort to Rebound From Record Loss

  • Capital budget reduced by almost half to about $2.8 billion
  • Shares rise as much as 6.2 percent following announcement

Anadarko Petroleum Corp. cut spending plans by almost half as it moves to recover from its worst year since spinning off from Panhandle Eastern Pipe Line Co. in 1986.

Shares of the third-largest U.S. natural gas producer jumped as much as 6.2 percent Tuesday. The Woodlands, Texas-based company reduced its 2016 capital budget to about $2.8 billion, according to a fourth-quarter earnings report released after markets closed on Monday.

Anadarko, with operations from New Zealand to Utah, is among explorers abandoning drilling projects and cutting spending to weather crude’s 70 percent collapse since June 2014. The cost-cutting effort announced by the independent producer, which doesn’t own refineries or filling stations, proved stronger than the market anticipated, said Brian Youngberg, an energy analyst at Edward Jones & Co. in St. Louis who recommends holding the stock.

"These actions should enable us to successfully manage through the current market volatility and position Anadarko for future success," Chairman and Chief Executive Officer Al Walker said in the report.

Dividend Review

While the company doesn’t expect to eliminate its dividend, cutting it may not be off the table, Bob Daniels, vice president of international and deep-water exploration, said on a conference call to discuss the results. He said the board will hold a meeting to discuss cash flows and "where we are relative to the appropriate level of dividend."

The company reported a net loss of $1.25 billion for the fourth-quarter, triple the $395 million loss a year earlier. For the year, its $6.69 billion loss was the largest ever. It plans to disclose more information about the 2016 capital plan on a March 1 call with investors.

Last year, Anadarko withdrew an offer to buy shale driller Apache Corp. after the target refused to engage in talks. Investors have long speculated that Anadarko itself is a potential takeover opportunity for major oil producers seeking to expand their exposure to shale.

Anadarko has lost about half of its market value in a year. It was up 4.4 percent to $39.94 as of 11:42 a.m. in New York.

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