Fri June 6, 2003 11:21 AM ET (Adds analyst comment, detail)

NEW YORK, June 6 (<a href=reuters.com>Reuters) - Shares of Anadarko Petroleum Corp. APC.N fell as much as 7 percent in early Friday trade after the independent oil and gas producer reduced its 2003 output forecast for the second time this year, indicating no growth in output from last year.

Anadarko, the second-largest U.S. independent following Devon Energy Corp. DVN.A , late Thursday announced it was lowering its 2003 production targets by 5 percent to 190 million barrels of oil equivalent (boe) from 200 million boe. That is essentially flat with 2002 volumes.

The Houston-based company blamed the shortfall on "production problems" in the Gulf of Mexico, Algeria and Qatar. Anadarko shares were down $2.08, or 4.4 percent, to $45.28 in morning trade.

Equity analysts reduced their ratings on Anadarko and expressed concern that Anadarko now has twice revised its forecasts this year, losing credibility with investors.

At an April 30 investor conference, Anadarko Chairman and Chief Executive Robert Allison reaffirmed the company would meet production goals. The company on January 31 reduced its output goal by 3 million to 200 million boe, citing the impact of higher prices and the oil-worker strike in Venezuela

Merrill Lynch analyst John Herrlin, who downgraded Anadarko to "neutral" to "buy" today, told clients most of the shortfall was due to temporary glitches. However problems in the Gulf of Mexico could set the company back next year as well.

Banc of America Securities analyst Robert Morris concurred, telling investors, "While the problems in Algeria and Qatar can be resolved, the offshore Gulf is still being evaluated but will most likely impact 2004 volumes."

In response Herrlin reduced his 2003 earnings estimate to $5.07 a share from $5.65 a share and cut his 2004 forecast to $4.12 a share from $4.85.

Morris, who rates the company "buy," though he cut his earnings forecast to $4.75 a share from $5.45 and next year's forecast to $3.90 a share from $4.40. Morris reduced his price target for Anadarko shares by $4 to $50.

Anadarko was expected to earn $5.22 and $4.43, according to the average analyst estimate compiled by Reuters Research.

In a statement yesterday, Anadarko emphasized that earnings would be stronger than expected thanks to high energy prices. The company also touted a gas discovery at its third eastern Gulf of Mexico deepwater prospect, Atlas, and that it expected to soon announce a $200 million acquisition.

Reuters, 06.04.03, 6:59 PM ET By Silene Ramirez

CARACAS, Venezuela, June 4 (Reuters) - Venezuela's Finance Minister Tobias Nobrega is touring Europe this week in a bid to convince official lenders, private banks, and rating agencies that the country's economic outlook is brighter than it seems. "Venezuela is beginning to be seen as a country that, with all its difficulties, has positive prospects in the medium and long term," Nobrega told Reuters in an interview Wednesday by mobile phone from Paris.

After spending two days in France, he was due to fly to the Netherlands Wednesday as part of a tour that includes a stop in London at the end of the week.

"The main purpose was to talk with European (export credit agencies), but we've used the opportunity to hold other meetings and make presentations about the country's financial situation," the minister said.

Venezuela, the world's No. 5 oil exporter, is in a severe recession following a crippling strike by foes of leftist President Hugo Chavez in December and January that disrupted oil exports and slashed government revenues.

The strike, which ended in early February, forced the government to impose strict price and currency controls, which have worsened the recession. The economy shrank by a record 29 percent in the first quarter of 2003.

But Nobrega will be stressing to bankers, investors and government officials that Chavez's government has managed to restore oil production to pre-strike levels of just over 3 million barrels per day. He also points to a recovery in Venezuelan sovereign debt bond values in recent weeks and an improvement in the country risk profile.

Venezuela's share of the benchmark J.P. Morgan Emerging Market Bond Index Plus <11EMJ> rose 1.26 percent Wednesday.

SYMPATHETIC AUDIENCE? But his audience may take some convincing. In a gloomy outlook shared by many private analysts, the International Monetary Fund has predicted the Venezuelan economy will shrink by 17 percent this year.

Chavez and his ministers reject this forecast as too pessimistic. One of the Venezuelan Central Bank directors, Armando Leon, told reporters Wednesday, he believed the economy would contract around 10 percent in 2003.

A finance ministry source mistakenly told Reuters Tuesday that Nobrega was in New York seeking financial help from bankers and investors. Nobrega told Reuters from Paris that a New York trip had been considered but was postponed, and he flew to Europe instead.

Nobrega was seeking to ensure that European export credit agencies did not take the same step as the U.S. Ex-Im Bank, which in April suspended export guarantees for Venezuela, citing the absence of "reasonable" guarantees of payment. The minister said he hoped that the European export guarantee agencies would be "more balanced ... than those on the other side of the Atlantic".

Asked whether he would be discussing new Venezuelan debt issues or seeking fresh financing, Nobrega was non-committal: "This is continual, these are things that you follow and monitor day by day".

In comments in Caracas Wednesday, the Central Bank's Leon said he believed Venezuela could place bonds abroad worth between $1 billion and $1.5 billion before the end of the year.

Nobrega has said in the past that the government wants to ease a heavy concentration of debt payments this year through possible debt swaps, direct credits from banks and financing for specific projects, especially in the strategic oil sector.

Venezuela is due to make debt payments totaling $960 million this month, according to official figures. The country's total external debt stands at $22.3 billion, of which $5 billion in debt payments and service falls due this year. (Additional reporting by Ana Isabel Martinez

June 2 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela is offering to supply millions of barrels of crude oil to the U.S. Strategic Reserve in a transaction worth as much as $1 billion over three years, the Wall Street Journal said, citing oil-industry officials.

The reserve, established by Congress to act as a buffer during energy crises caused by disruption in the oil markets, doesn't normally buy crude direct from producers; the Venezuela deal is being put together by Free Market Petroleum LLC with the involvement of Jack Kemp, a former U.S. congressman and the Republican Party's vice- presidential candidate in 1996, the paper said.

Free Market Petroleum's involvement follows a strike within the Venezuelan industry against the policies of President Hugo Chavez, noted for his leftwing views and anti-U.S. rhetoric; that strike led to the dismissal of 18,000 oil workers and managers, including much of the sales force of Petroleos de Venezuela, the state-run oil monopoly, the Journal reported.

Kemp, who says he's a member of Free Market's board of directors, met on a number of occasions with U.S. Department of Energy Officials in Washington, and has met Chavez and his ministers and is a friend of Bernardo Alvarez, Venezuela's ambassador in the U.S., the Journal said.

(WSJ 6-2 A2)

For the Wall Street Journal's Web site enter {WWSJ }

Reuters, 05.31.03, 5:49 PM ET

CARACAS, Venezuela (Reuters) - Venezuela's Energy Minister Rafael Ramirez said Saturday that the OPEC member could cut oil production by 100,000 barrels per day (bpd) if the cartel decides to reduce output by around one million barrels at its June policy meeting. "In this case, talking about a cut of an additional million barrels, for Venezuela means about 100,000 barrels per day," the minister told state news agency Venpres. Ramirez said earlier this week said that OPEC could cut production by up to one million barrels should it decide to reduce quotas to keep prices within preferred band. OPEC is scheduled to meet on June 11 in Qatar to decide on production policy and rival exporters -- Russia, Norway, Mexico, Oman, Angola, Egypt and Syria -- will also attend the Doha conference. The cartel is concerned that post-war resumption of Iraq's production will cut into prices. Members agreed in April to cut production by 2 million bpd beginning June 1, after several cartel members earlier in the year increased output ahead of the invasion of Iraq. OPEC Secretary General Alvaro Silva said last week that the cartel could consider output cuts to keep oil prices within its preferred price range of $22 to $28 per barrel. Venezuela, the world's No. 5 crude exporter, produces around 3.1 million bpd, according to government figures. Some analysts estimate output is closer to 2.6 million bpd as the state oil firm PDVSA struggles to completely recover from a two-month strike against President Hugo Chavez.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, May 30, 2003 By: VHeadline.com Reporters

EI Energy Intelligence Oil Daily reports from Washington that Venezuela’s oil industry is practically back to normal and the 5th-largest world crude exporter is currently producing 2.84 million barrels per day, or just 124,000 bpd below its 2.96 million bpd OPEC quota, after a crippling opposition-led strike that halted output in December and January, according to the country’s deputy Energy Minister, Luis Vierma.

At that output level, Venezuela will not need to make cuts if the group of oil exporters decides to lower quotas at their June 11 meeting to prepare for the arrival of Iraqi supplies in the market. “Venezuela is producing below its quota. If there is a cut, our quota might be reduced, but not total output,” Vierma said at a press briefing here.

In an effort to answer strike-induced questions about Venezuela’s reliability as an oil supplier, Vierma met with US government officials — Undersecretary of Energy Robert Card among them — to reassure them of his country’s comeback from the stoppage that had shrunk crude output to 200,000 bpd from pre-strike levels of 3.1 million bpd. A delegation of US energy officials is scheduled to visit Venezuela between June 18 and 21 to oversee oil operations and witness firsthand the country’s recovery from the strike.

Exports to the US, which normally account for 52% of total sales of Venezuela’s oil and products, were down to zero during the strike but have now resumed and are expected to be back to normal soon. “Exports to the US will be back to normal in two or three weeks, I believe Venezuela is, and will be the most reliable source of energy to the US,” Vierma said.

The resumption of exports of reformulated gasoline (RFG) to the US from Venezuela’s giant Paraguana complex has been rescheduled three times. Vierma said he was not aware of RFG shipments to the US that traders say were turned back some weeks ago for lack of the required specifications.

Venezuela normally ships some 1.2 million-1.3 million bpd of crude and around 200,000 bpd of products to the US.

Counting 500,000 bpd from the four Orinoco Belt projects plus liquids from natural gas — none of which are included in the OPEC quota — Venezuela’s total production is currently at 3.34 million bpd, according to Vierma. The official dismissed statements by foes of Venezuelan President Hugo Chavez who say that the country is currently producing at just 2.6 million bpd.

“Maybe they are just talking about state-owned Petroleos de Venezuela (PDV),” explained Vierma. A breakdown of total Venezuelan output includes 500,000 bpd from the four privately operated Orinoco Basin syncrude projects plus 500,000 bpd more from associations between PDV and 51 private operators, said Vierma. The rest is PDV’s own production.

After the strike, Chavez’s friends took over control of Venezuela’s oil industry. Some 18,000 PDV technicians and managers — many of whom had supported the strike — were fired and the company was completely restructured.

Vierma explained that younger oil fields in eastern Venezuela, which are generally 16,000 to 17,000 feet deep, benefited from the strike because closing them down helped to recover pressure in the wells, which in turn boosted output by 10%. Production from eastern Venezuela is typically about 1.68 million bpd. The more mature fields located to the west of the country, are now producing 1.2 million bpd, down from roughly 1.56 million bpd before the strike.

And judging from recently announced oil and gas finds, PDV’s post-strike restructuring seems also to have benefited the country’s oil industry.

During the strike, Venezuela’s international credit ratings plunged, and some analysts had warned that the strike might be the beginning of the end of Chavez. But the successful efforts at bringing back oil operations, which constitute more than 50% of government revenues, have started to reverse those predictions.

Citing the “almost complete return to the level of oil production that was experienced at PDV,” international rating agency Moody’s improved its outlook this week for Venezuela’s ratings to stable from developing.

However, Moody’s cautioned of a “deep and potentially long-lasting damage to the country’s main source of foreign currency earnings as a result of the ongoing restructuring of PDV as well as the domestic opposition to such restructuring efforts.”

After months of negotiations, Chavez and his foes signed an agreement on Thursday that recommends holding a referendum on the president’s ruling after August 19. The agreement was fostered by the Organization of American States (OAS), former US President Jimmy Carter, and a group of six countries that acted as mediators to break the stalemate between the government and the opposition.