Edgar Filing: ANADARKO PETROLEUM CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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ANADARKO PETROLEUM CORPORATION
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[ANADARKO LOGO]

P. O. BOX 1330
HOUSTON, TEXAS 77251-1330

March 25, 2002

To THE STOCKHOLDERS:

You are cordially invited to attend the Annual Meeting of Stockholders of
the Company. The meeting will be held at The Cynthia Woods Mitchell Pavilion,
2005 Lake Robbins Drive, The Woodlands, Texas, on Thursday, April 25, 2002, at
10:00 a.m. (CDT).

The Notice of the Annual Meeting and the attached Proxy Statement provide
information concerning the matters to be considered at the meeting. In addition,
the general operations of the Company will be discussed and stockholders will be
given the opportunity to ask questions.

We value your opinions and encourage you to participate in this year's
Annual Meeting by voting your proxy. You may vote either by the Internet or
telephone using the instructions on the proxy card or by signing your proxy card
and returning it in the enclosed envelope.

Very truly yours,

/s/ JOHN N. SEITZ
JOHN N. SEITZ
President and Chief Executive
Officer

[ANADARKO LOGO]

P. O. BOX 1330
HOUSTON, TEXAS 77251-1330

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The Annual Meeting of Stockholders of Anadarko Petroleum Corporation will
be held at The Cynthia Woods Mitchell Pavilion, 2005 Lake Robbins Drive, The
Woodlands, Texas, on Thursday, April 25, 2002, at 10:00 a.m. (CDT) for the
purpose of:

(1) Electing four directors; and

(2) Transacting any other business as may properly be brought before the
meeting and any adjournments or postponements thereof.

ADMISSION

Printed on the back of each Proxy Card sent to registered shareholders is
an admission ticket. This ticket is valid to admit the stockholder to the 2002
Annual Meeting. SEATING IS LIMITED AND ADMISSION TO THE MEETING WILL BE ON A
FIRST-COME, FIRST-SERVED BASIS. For wheelchair and hearing impaired seating,
please see a host/hostess for assistance.

You will be asked to present valid picture identification, such as a
driver's license or passport. Cameras, recording devices and other electronic
devices will not be permitted at the meeting.

If your shares are held in the name of a bank, broker, or other holder of
record and you plan to attend the Annual Meeting, you must present proof of your
ownership of Company stock, such as a current bank or brokerage account
statement, to be admitted to the Annual meeting.

RECORD DATE

March 1, 2002, has been fixed as the record date. If you are a record
holder of common stock at the close of business on the record date, you are
entitled to receive notice of and to vote at the Annual Meeting.

Please take the time to vote by following the Internet or telephone voting
instructions on the enclosed proxy card or by completing and mailing the proxy
card. A postage-prepaid envelope has been provided for your convenience if you
wish to vote by mail. You may revoke your proxy at any time before the vote is
taken by sending to the Corporate Secretary of the Company a proxy with a later
date or voting again by Internet or telephone. Alternatively, you may revoke
your proxy by delivering to the Corporate Secretary of the Company a written
revocation prior to the Annual Meeting or by voting in person at the Annual
Meeting.

REGARDLESS OF THE NUMBER OF COMPANY COMMON SHARES YOU HOLD, YOUR VOTE IS
VERY IMPORTANT.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ SUZANNE SUTER
SUZANNE SUTER
Corporate Secretary

Dated: March 25, 2002
The Woodlands, Texas

[ANADARKO LOGO]

P. O. BOX 1330
HOUSTON, TEXAS 77251-1330

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2002

YOUR VOTE IS VERY IMPORTANT. Please take the time to vote by following the
Internet or telephone voting instructions on the enclosed proxy card or by
completing and mailing the proxy card. A postage-prepaid envelope has been
provided for your convenience if you wish to vote by mail.

If you vote by mail and your proxy card is returned unsigned, your vote
cannot be counted. If you vote by mail and the returned proxy card is signed and
dated without indicating how you want to vote, your proxy will be voted as
recommended by the Board of Directors.

REVOKING YOUR PROXY

You may revoke your proxy at any time prior to the meeting by:

- sending a written statement to the Corporate Secretary of the Company;

- submitting a valid proxy with a later date either by Internet, by
telephone or in writing; or

- voting in person at the Annual Meeting.

VOTE REQUIRED AND METHOD OF COUNTING VOTES

Number of Shares Outstanding. At the close of business on the record date,
March 1, 2002, there were 248,909,123 shares of common stock outstanding, which
are entitled to vote at the meeting.

Quorum. A quorum is present if at least a majority of the outstanding
shares of common stock on the record date are present in person or by proxy.

Vote Required. A plurality of the votes cast is required for the election
of Directors. This means that the four Director nominees with the most votes are
elected. Only votes "for" or "against" affect the outcome. Abstentions are not
counted for purposes of the election of Directors.

Under New York Stock Exchange rules, if you are a beneficial owner and your
broker holds your shares in its name, the broker is permitted to vote your
shares on the election of Directors even if the broker does not receive voting
instructions from you.

ANADARKO BOARD OF DIRECTORS

STRUCTURE

The Board is divided into three classes of directors for purposes of
election. One class of directors is elected at each Annual Meeting of
stockholders to serve for a three-year term.

At the 2002 meeting, the terms of four directors are expiring. Each
director elected at this Annual Meeting will hold office until the expiration of
his term in 2005. Those directors not up for election this year will continue in
office for the remainder of their terms.

If a nominee is unavailable for election, the proxies will be voted for the
election of another nominee proposed by the Board or, as an alternative, the
Board may reduce the number of directors to be elected at the meeting.

ITEM 1 -- ELECTION OF DIRECTORS

DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2005

Ronald Brown (69) -- Mr. Brown resides in Rancho Santa Fe, California. He
retired as a bank executive in 1992. Mr. Brown has been a director of the
Company since 1986.

John R. Butler, Jr. (63) -- Mr. Butler has been Chairman of J. R. Butler
and Company, a reservoir engineering company in Houston, Texas, since 1976. He
is also currently a board member and former Chairman, President and CEO of the
Houston Advanced Research Center, a 501(c)(3) corporation. He was Chairman and
Chief Executive Officer of GeoQuest International Holdings, Inc., Senior
Chairman of Petroleum Information Corp. and Vice Chairman of Petroleum
Information/Dwights, L.L.C. until 1997. He is currently on the Board of
Directors of Kelman Technology, Inc. of Calgary, Alberta, Canada, a Toronto
Stock Exchange Company. He was also Chairman of the Society of Exploration
Geophysicists Foundation until December 2001. Mr. Butler has been a director of
the Company since 1996.

Preston M. Geren III (50) -- Mr. Geren accepted an appointment as a Senior
Executive with the Department of Defense in 2001. He had been an Attorney in
Fort Worth, Texas since 1998. From January 1997 through August 1998, he was a
management consultant for Public Strategies, Inc. He was a U.S. Congressman for
the Twelfth Congressional District of Texas from 1989 to 1997. He is currently a
director of Cullen Frost Bankers, Inc. He was a director of Union Pacific
Resources Group Inc. ("UPRG") until UPRG merged with the Company in 2000. Mr.
Geren has been a director of the Company since 2000.

John R. Gordon (54) -- Mr. Gordon is Senior Managing Director of Deltec
Asset Management LLC, a New York limited liability company, with executive
offices in New York, New York. He had been President of Deltec Asset Management
Corporation since 1988 until it was converted into a limited liability company.
Mr. Gordon has been a director of the Company since 1988.

DIRECTORS UP FOR ELECTION IN 2003

Conrad P. Albert (56) -- Mr. Albert resides in Bedford, New York and is
engaged in private investments. Mr. Albert was a director of Deep Tech
International until August 1998. He has been a director of the Company since
1986.

Robert J. Allison, Jr. (63) -- Mr. Allison has been Chairman of the Board
since 1986 and a director since 1985. He was also Chief Executive Officer of the
Company from 1986 until his resignation from that position in January 2002. He
was elected as a director of Freeport McMoran Copper and Gold Inc. located in
New Orleans, Louisiana in 2001.

John W. Poduska, Sr. (64) -- Mr. Poduska was a director of UPRG until UPRG
merged with the Company in 2000. He is also a director of Novell, Inc.,
Safeguard Scientific, Inc., Energe Interactive, Inc., and EXA, Inc. Mr. Poduska
has been a director of the Company since 2000.

John N. Seitz (51) -- Mr. Seitz was elected Chief Executive Officer of the
Company in January 2002 and has served as President since 1999. He has been an
executive officer of the Company since 1995 and has worked for the Company since
1977. Mr. Seitz has been a director of the Company since 1997.

DIRECTORS UP FOR ELECTION IN 2004

Larry Barcus (64) -- Mr. Barcus is Chairman of L. G. Barcus and Sons, Inc.,
Kansas City, Kansas, a general contractor with operations nationwide. Mr. Barcus
has been a director of the Company since 1986.

James L. Bryan (66) -- Mr. Bryan has been Executive Vice President of
Newpark Drilling Fluids, Inc. since 1999. Newpark Drilling Fluids is an oilfield
services firm headquartered in Houston, Texas. Mr. Bryan retired as Senior Vice
President of Dresser Industries, Inc. in 1998. He had been a Vice President of
Dresser since 1990. Mr. Bryan has been a director of the Company since 1986.

George Lindahl III (56) -- Mr. Lindahl was appointed as Managing Partner of
Sandefer Capital Partners, L.P., an oil and gas investment firm with offices in
Austin and Houston, Texas, in December 2001. Although Mr. Lindahl retired as
Vice Chairman of the Board of the Company in 2001, a position he had held since
July 2000, he is continuing as a director of the Company. He had been Chairman,
President and Chief Executive Officer of UPRG from July 1999 until UPRG merged
with the Company in 2000. Mr. Lindahl was elected as a director of the Company
in 2000.

Jeff D. Sandefer (41) -- Mr. Sandefer is President of Sandefer Capital
Partners, L.P., an oil and gas investment firm with offices in Austin and
Houston, Texas. He has held that position since 1995. Mr. Sandefer also serves
on the faculty of the University of Texas Graduate School of Business. He was a
director of UPRG until UPRG merged with the Company in 2000. Mr. Sandefer was
elected as a director of the Company in 2000.

BOARD MEETINGS AND COMMITTEES

During 2001, the Board met six times. The Board also has an Executive
Committee that may take action with respect to the conduct of the business of
the Company between Board meetings. The Executive Committee met two times in
2001. During 2001, each incumbent director of the Company attended all of the
meetings of the Board during the time he was a director.

The Board has an Audit Committee and Compensation and Benefits Committee.
Membership on these two committees is limited to non-employee directors.

Audit Committee. Messrs. Albert, Barcus, Butler and Sandefer are members
of the Audit Committee. The Audit Committee met seven times in 2001. Each member
attended all of the committee meetings during the time he was on the committee.
The primary responsibilities of the Audit Committee are independent objective
oversight of the Company's accounting functions and internal controls.

Compensation and Benefits Committee. The Compensation and Benefits
Committee met five times in 2001. Messrs. Brown, Bryan, Geren, Gordon and
Poduska are members of the Compensation and Benefits Committee. Each member
attended all of the committee meetings during the time he was on the committee.
The primary responsibilities of the Compensation and Benefits Committee are
establishing and administrating director and executive compensation and benefit
programs. The Committee also has general oversight responsibilities of the
Company's qualified benefit plans.

DIRECTOR COMPENSATION

Directors who are not employees of Anadarko receive compensation for Board
and committee service. Directors who are employees of Anadarko receive no
compensation for their service on the Board. The

principal components of director compensation, which a director may elect to
receive in cash, common stock or a combination of both, are as follows:

1. an annual Board retainer of $40,000;

2. a fee of $1,250 for each Board or committee meeting attended, plus
expenses related to attendance;

3. an annual committee membership retainer of $3,000; and,

4. an additional annual committee retainer of $3,000 for serving as
committee chair.

Deferred Stock. In January 2002, the Board terminated the director phantom
stock program and cancelled phantom stock units previously granted to the
non-employee directors. The Board granted each current non-employee director
deferred stock under the 1998 Director Stock Plan equal to the number of phantom
shares that had been cancelled.

1998 Director Stock Plan. Under this plan, the directors may grant
stock-based awards to non-employee directors. On July 30, 2001, the directors
granted each non-employee director an option to purchase 5,000 shares of common
stock. The option price is the fair market value on the date of grant. The
options will vest 50% one year from the date of grant and the remaining 50% two
years from the date of grant. The options granted will expire 10 years from the
date of grant. On January 31, 2002, the Board made a deferred stock grant equal
to $14,500 to each non-employee director. The deferred stock will be distributed
in shares when the director terminates. Directors will receive dividends on and
will be entitled to vote the deferred stock. Both of the grants were made under
the 1998 Director Stock Plan.

STOCK OWNERSHIP

The information provided below summarizes the beneficial ownership of
officers and directors of the Company and owners of more than 5% of outstanding
common stock. In general, "beneficial ownership" includes those shares of common
stock someone has the power to vote, sell or acquire within 60 days. It includes
common stock that is held directly and also shares held indirectly through a
relationship, a position as a trustee or under a contract or understanding.

COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

On March 1, 2002, the directors and executive officers of Anadarko
beneficially owned, in the aggregate, 7,935,435 shares of Anadarko common stock
(approximately 3% of the outstanding shares entitled to vote). Mr. Allison is
the only director, nominee for director or officer of the Company who owns and
has the right to acquire more than 1% of the outstanding common stock.

AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------
SHARES
NUMBER OF SHARES EXERCISABLE TOTAL
BENEFICIALLY WITHIN BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNED(1) 60 DAYS OWNERSHIP OF CLASS
------------------------ ---------------- ----------- ---------- --------

Robert J. Allison, Jr. ....................... 580,080 1,985,000 2,565,080 1%
John N. Seitz................................. 190,308 808,000 998,308 *
George Lindahl III............................ 27,603 839,753 867,356 *
Michael E. Rose............................... 39,107 150,000 189,107 *
Charles G. Manley............................. 99,183 336,000 435,183 *
William D. Sullivan........................... 72,364 0 72,364 *
Conrad P. Albert(2)........................... 53,047 52,500 105,547 *
Larry Barcus.................................. 33,624 72,500 106,124 *
Ronald Brown(3)............................... 20,787 72,500 93,287 *
James L. Bryan................................ 30,458 72,500 102,958 *
John R. Butler, Jr. .......................... 24,902 42,500 67,402 *
Preston M. Geren III(4)....................... 6,198 30,438 36,636 *
John R. Gordon................................ 41,586 72,500 114,086 *
John W. Poduska, Sr.(4)....................... 14,446 38,401 52,847 *
Jeff D. Sandefer.............................. 1,463 2,500 3,963 *
All directors and executive officers as a
group, (31 persons)......................... 1,872,843 6,062,592 7,935,435 3%

---------------

* Less than one percent.

(1) This number does not include shares of common stock which the directors or
officers of the Company have the right to acquire within 60 days of March 1,
2002.

(2) Mr. Albert disclaims beneficial ownership of the 11,573 shares held in his
wife's name and his children's names.

(3) Mr. Brown disclaims beneficial ownership of the 101 shares held in his
wife's name.

(4) Messrs. Geren and Poduska each have been granted 2,139 restricted shares,
which have vested, but must meet certain performance criteria before being
exercised.

OWNERS OF MORE THAN FIVE PERCENT OF ANADARKO STOCK

The Company has not been notified of any beneficial owners of more than 5%
of Anadarko common stock.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company
during and with respect to its most recently completed fiscal year, the Company
believes that all transactions by reporting persons during 2001 were reported on
a timely basis except for those disclosed in this report. During 2001, a Form 4
was filed late for each of the following individuals each reporting the
corresponding number of transactions: Mr. Lindahl, four transactions; Mr.
Stover, one transaction; Mr. Taylor, two transactions; and Mr. Butler, three
transactions.

AUDIT COMMITTEE REPORT

The following report of the audit committee of the Company shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall this report be incorporated by reference into any
filing made by the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.

The Audit Committee of the Board is responsible for independent, objective
oversight of the Company's accounting functions and internal controls. The Audit
Committee is composed of four directors, each of whom is independent as defined
by the New York Stock Exchange listing standards. The Audit Committee operates
under a written charter approved by the Board of Directors.

Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards in the United States and
issuing a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.

KPMG LLP served as the Company's independent accountant during 2001 and was
appointed by the Executive Committee of the Board to serve in that capacity for
2002. KPMG LLP has served the Company since its initial public offering in 1986
through various services performed in connection with the audit of the Company's
financial statements. Representatives of KPMG LLP will be present at the
meeting, will have the opportunity to make a statement, if so desired, and will
be available to respond to appropriate questions from stockholders.

In connection with these responsibilities, the Audit Committee met with
management and the independent accountants to review and discuss the December
31, 2001 financial statements. The Audit Committee also discussed with the
independent accountants the matters required by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).

The Audit Committee also received written disclosures from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants that firm's independence. The
following table presents fees for the audit of the Company's annual consolidated
financial statements for 2001 and for other services provided by KPMG LLP.

Audit Fees, excluding Audit Related Fees.................... $1,139,000
----------
Financial Information Systems -- Design and Implementation $ --
Fees......................................................
----------
All Other Fees:
Audit Related Fees........................................ $ 312,000
Other Non-Audit Services.................................. 749,000
----------
Total All Other Fees...................................... $1,061,000
----------

Audit related fees consisted primarily of fees for our shelf registration
statement, debt issuances and benefit plan audits. Other non-audit services
consisted of tax compliance and tax consulting services. The Audit Committee has
concluded that the provision of non-audit services is compatible with
maintaining KPMG LLP's independence.

Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, to be filed with the Securities and Exchange Commission.

THE AUDIT COMMITTEE
John R. Butler, Jr., Chairman
Conrad P. Albert
Larry Barcus
Jeff D. Sandefer

COMPENSATION AND BENEFITS COMMITTEE REPORT
ON 2001 EXECUTIVE COMPENSATION

The Compensation Committee, listed on page 3, is responsible for
establishing and administering the executive compensation programs of the
Company. This report describes the compensation decisions made by the
Compensation Committee during 2001 with respect to Anadarko's executive
officers.

COMPENSATION PHILOSOPHY OF THE COMPANY

Anadarko's executive compensation programs consist primarily of base
salary, performance-based annual bonus and long-term stock incentive plans which
the Company considers essential to attract, retain and reward key personnel.
Collectively, these programs are designed to promote the strategic objectives
that are critical to the long-term success of the Company.

The Compensation Committee utilizes an outside compensation consultant to
review executive compensation and benefit programs as well as total compensation
levels provided to executive officers. Anadarko's compensation programs provide
executives the opportunity to earn compensation levels within the top quartile
of a select peer group of oil and gas companies, to the extent that Company and
executive performance on a combined and individual basis so warrants. The peer
group consists of energy companies similar in business operations to Anadarko.
Most of these energy companies are also included in the Dow Jones Oil-Secondary
index used for stock price performance comparison on the Performance Graph. The
Dow Jones Oil-Secondary index is comprised of specific energy companies
representing most facets of the industry including independent oil and gas
companies as well as those having integrated operations. Not all companies
included in the index are considered comparable to Anadarko with respect to
analyzing executive compensation and benefit levels. This index does provide a
meaningful comparison of total stockholder return against a consistent
representation of oil and gas companies with whom Anadarko competes for
investment dollars.

In designing the Company's compensation programs, the Compensation
Committee's primary consideration is Anadarko's achievement of strategic
business goals that serve to enhance shareholder value. Consideration is also
given to competitive practice, market economics and other factors. Section
162(m) of the Internal Revenue Code limits a company's ability to deduct
compensation paid in excess of $1 million during any fiscal year to the Chief
Executive Officer and the next four highest paid officers, unless the
compensation meets shareholder approved performance-based requirements. Awards
under the Annual Incentive Bonus Plan (the "Incentive Plan") and the 1999 Stock
Incentive Plan (the "Stock Incentive Plan") satisfy the performance-based
requirements under section 162(m). The Compensation Committee is committed to
making awards that qualify as deductible compensation under section 162(m) of
the Code whenever possible. However, where granting awards is consistent with
the strategic goals of the Company, the Compensation Committee reserves the
right to make awards that are non-deductible when it believes it is in the best
interest of the Company.

BASE SALARY

Anadarko structures its compensation programs to match pay with
performance. Individual base salaries are determined based on a subjective
evaluation considering peer-company market data, the executive's performance and
the length of time the executive has been in the position. Base compensation is
reviewed annually by the Compensation Committee and any adjustments are designed
to reflect each executive officer's contribution to the performance of the
Company.

Except for certain individuals who were promoted in 2001, the majority of
executive officers, including Mr. Allison, have not received an increase to base
salary since August 2000.

ANNUAL INCENTIVE BONUS

The Incentive Plan puts a significant portion of total compensation at risk
by linking potential annual compensation to the Company's achievement of
specific performance goals. These goals are established by the Compensation
Committee at the beginning of each calendar year and for 2001 included:

(1) Operational criteria comparing Anadarko's five-year worldwide
reserve replacement and five-year worldwide cost of finding against the
five-year worldwide reserve replacement and five-year worldwide cost of
finding for a select group of peer companies;

(2) Financial criteria of net income and cash flow, both of which are
measured against internal objectives; and

(3) Stock performance criteria comparing Anadarko's total stockholder
return for a three-year period against the total stockholder return of a
select group of peer companies for the same period.

Each performance goal and its specific criteria are weighted based upon the
relative importance of the goal as determined by the Compensation Committee.

Under the Incentive Plan, a bonus target is established for each executive
officer based upon a review of the competitive data for that position, level of
responsibility and the position's ability to impact the Company's success. These
individual targets range up to 100% of base salary for the Chief Executive
Officer. Actual bonus awards are based on the Company's achievement of the
performance goals. Individuals may receive up to 200% of their individual bonus
target if the Company significantly exceeds the specified goals and, conversely,
no bonus or a reduced bonus payment if the Company does not attain predefined
levels of performance.

Based on the Company's overall performance during 2001 against the
specified operational, financial and stock performance goals, the Compensation
Committee approved a bonus of 150% of individual bonus target for Mr. Allison
and the executive officers. The amount for Mr. Allison is reflected in the
Summary Compensation Table.

STOCK PLANS

The Company makes certain stock-based awards under the Stock Incentive Plan
to align the interests of executive officers with those of stockholders. The
Compensation Committee annually reviews competitive market data to determine
appropriate stock awards based on the executive's position and the market value
of the stock. In addition, the Compensation Committee considers previous stock
grants when determining grant size for executive officers. Under the Stock
Incentive Plan, the Compensation Committee has made annual and multi-year grants
of stock options at the fair market value of the common stock on the date of
grant. The Compensation Committee believes stock options directly align the
executive officers' compensation opportunity with that of shareholders since the
options will only produce value through the appreciation of the stock. The
Company periodically makes awards of restricted stock on a limited basis to
recognize significant key individual contributions.

During 2001, there were no stock options awarded to executive officers
except for two individuals who received grants in recognition of their election
to an executive officer position. Special restricted stock awards made to select
executive officers in 2001 are reflected in the Summary Compensation Table.

SUMMARY

Anadarko's compensation strategy is to provide total compensation
commensurate with the achievement of specific short-term and long-term
operational, financial and strategic objectives. Accordingly, Mr. Allison's
total compensation for 2001 was within the top quartile of the peer companies as
a result of Anadarko's strong overall performance.

The Compensation Committee believes the design of the Company's total
executive compensation program provides executives the incentive to maximize
long-term operational performance using sound financial controls and high
standards of integrity. It is the Compensation Committee's belief that this
focus will continue to be reflected in Anadarko's stock price and return to
shareholders.

THE COMPENSATION AND BENEFITS COMMITTEE
John W. Poduska, Sr.
Ronald Brown
James L. Bryan
Preston M. Geren III
John R. Gordon

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
-------------------------------
OTHER
ANNUAL
COMPEN-
SALARY BONUS SATION
NAME PRINCIPAL POSITION YEAR ($) ($) ($)
---- ------------------ ---- --------- --------- -------

Robert J. Allison, Jr.(3)..... Chairman and Chief Executive Officer 2001 1,300,000 1,950,000 0
Chairman and Chief Executive Officer 2000 1,125,000 2,600,000 0
Chairman and Chief Executive Officer 1999 1,000,000 2,000,000 0
John N. Seitz(3).............. President and Chief Operating Officer 2001 800,000 1,080,000 0
President and Chief Operating Officer 2000 639,583 1,440,000 0
President and Chief Operating Officer 1999 475,000 800,000 0
George Lindahl III............ Vice Chairman 2001 796,825 1,080,000 0
Vice Chairman 2000 366,667 1,440,000 208,559
Michael E. Rose............... Executive Vice President, Finance and CFO 2001 500,000 490,000 0
Executive Vice President, Finance and CFO 2000 441,667 650,000 0
Senior Vice President, Finance and CFO 1999 370,000 333,000 0
Charles G. Manley............. Executive Vice President, Administration 2001 480,000 470,000 0
Executive Vice President, Administration 2000 423,417 624,000 0
Senior Vice President, Administration 1999 355,000 320,000 0
William D. Sullivan........... Executive Vice President, E&P 2001 374,167 407,000 81,764(6)
VP Operations -- Int'l, GOM & Alaska 2000 310,000 380,000 0
VP, International Operations 1999 270,000 216,000 55,080

LONG-TERM COMPENSATION
------------------------------------
AWARDS
-----------------------
SECURITIES ALL
UNDERLYING OTHER
RESTRICTED OPTIONS/ LTIP COMPEN-
STOCK(1) SARS(2) PAYOUTS SATION
NAME ($) (#) ($) ($)
---- ---------- ---------- ---------- ---------

Robert J. Allison, Jr.(3)..... 0 0 0 294,441(4)
0 750,000 0 1,648,619
0 650,000 10,312,500 316,615
John N. Seitz(3).............. 0 0 0 145,970(4)
0 500,000 0 5,668,216
0 0 0 98,564
George Lindahl III............ 0 0 0 2,276,759(5)
6,187,500 500,000 0 6,209,500
Michael E. Rose............... 499,500 0 0 78,952(4)
0 300,000 0 5,019,886
0 0 0 94,747
Charles G. Manley............. 0 0 0 76,715(4)
0 300,000 0 4,246,151
0 0 0 95,831
William D. Sullivan........... 0 0 0 52,554(4)
0 175,000 0 1,771,497
0 0 0 48,546

---------------

(1) In 2001, Mr. Lindahl exercised a provision in his employment agreement with
the Company and elected to retire effective December 28, 2001. As a result,
the restricted stock awarded to Mr. Lindahl in 2000 vested fully on December
28, 2001 in accordance with the terms of his employment agreement. As of
December 31, 2001, Mr. Rose held 7,500 restricted shares valued at $426,375
based on the year-end closing stock price. The restricted stock awarded to
Mr. Rose in 2001 vests 25% per year each April 26 beginning in 2002.
Dividends will be paid on unvested shares.

(2) No SAR's are outstanding.

(3) In January 2002, Mr. Seitz was named President and Chief Executive Officer
of the Company; Mr. Allison remains as Chairman of the Board of Directors.

(4) Includes (a) Company contributions to the Anadarko Employee Savings Plan and
Savings Restoration Plan; (b) payments under the Annual Override Bonus Plan
(no new awards have been made under this plan since 1986) and (c) the full
value of Company paid split-dollar insurance. The 2001 amounts for items
(a), (b) and (c) are for Mr. Allison, $234,000, $43,535 and $8,157; for Mr.
Seitz, $134,400, $10,233 and $1,337; for Mr. Rose, $69,000, $8,422 and
$1,530; for Mr. Manley, $66,240, $8,591 and $1,884; and for Mr. Sullivan,
$45,250, $6,727, and $577. In addition, Mr. Allison's amount includes $8,749
attributable to the full annual cost of term life insurance purchased by the
Company for Mr. Allison under the Estate Enhancement Option Program in
exchange for his relinquishment of certain benefits owed him by the Company.

(5) Includes $199,010 attributable to Company contributions to the Anadarko
Employee Savings Plan and Savings Restoration Plan; $8,366 attributable to
the full annual cost of a term life insurance policy purchased by the
Company for Mr. Lindahl and $2,069,383 attributable to payments made to Mr.
Lindahl upon the exercise of the termination provision in his employment
agreement with the Company.

(6) Represents certain perquisites, including $70,232 attributable to the net
payment of taxes by the Company on Mr. Sullivan's behalf associated with his
previous foreign assignment. None of the other five individuals listed above
had total perquisites exceeding $50,000 or 10% of annual compensation in
2001.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

This table has been omitted from this proxy statement since the named
executive officers did not receive any option or SAR grants in 2001.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

NUMBER OF SECURITIES
SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-
ACQUIRED UNEXERCISED OPTIONS/SARS MONEY OPTIONS/SARS AT
ON EXERCISE VALUE AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)
NAME (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE*
---- ----------- ------------ ------------------------- ----------------------------

Robert J. Allison, Jr. ..... 0 $0 1,985,000/375,000 $49,157,419/$3,220,781
John N. Seitz............... 0 $0 808,000/250,000 $16,241,460/$2,147,188
George Lindahl III.......... 0 $0 839,753/0 $ 10,014,944/$0
Michael E. Rose............. 0 $0 150,000/150,000 $ 1,288,313/$1,288,313
Charles G. Manley........... 0 $0 336,000/150,000 $ 5,228,258/$1,288,313
William D. Sullivan......... 0 $0 0/175,000 $ 0/$1,503,031

---------------

* Computed based upon the difference between aggregate fair market value on
December 31, 2001 ($57.12 per share) and aggregate exercise price.

PERFORMANCE GRAPH

The following performance graph compares the performance of the Company's
common stock to the S&P 500 Index and to the Dow Jones Oil -- Secondary Index
for the last five years. The graph assumes that the value of the investment in
the Company's common stock and each index was $100 at December 31, 1996, and
that all dividends were reinvested.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ANADARKO PETROLEUM CORP., DOW JONES OIL -- SECONDARY INDEX AND S&P 500 INDEX

(PERFORMANCE GRAPH)

FISCAL YEAR ENDED DECEMBER 31

----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------

Anadarko Petroleum Corporation... 100 94 96 107 224 180
Dow Jones Oil -- Secondary
Index........................... 100 100 68 79 126 116
S&P 500 Index.................... 100 133 171 208 189 166

Assumes $100 invested on December 31, 1996.

* Total Return Assumes Reinvestment of Dividends

Total Return Data Provided by S&P's Institutional Market Services and Dow Jones
& Company Inc.

PENSION PLAN TABLE

The Company has a defined benefit retirement plan that covers all United
States employees and does not require employee contributions. The Anadarko
Retirement Plan provides benefits based on a formula that considers length of
service and final average pay. For this purpose, "pay" generally includes the
amounts shown in the Salary and Bonus columns of the Summary Compensation Table.
The following table reflects the estimated single life annuity payable annually
at normal retirement at age 65 in specified remuneration and years-of-service
classifications, based on the benefit formula in effect on December 31, 2001.

YEARS OF SERVICE
RETIREMENT ----------------------------------------------------------------------------------
EARNINGS 15 20 25 30 35
---------- ---------- ---------- ---------- ---------- ----------

$1,000,000 $ 268,000 $ 357,000 $ 446,000 $ 536,000 $ 625,000
1,250,000 335,000 447,000 559,000 671,000 782,000
1,500,000 403,000 537,000 671,000 806,000 940,000
1,750,000 470,000 627,000 784,000 941,000 1,097,000
2,000,000 538,000 717,000 896,000 1,076,000 1,255,000
2,250,000 605,000 807,000 1,009,000 1,211,000 1,412,000
2,500,000 673,000 897,000 1,121,000 1,346,000 1,570,000
2,750,000 740,000 987,000 1,234,000 1,481,000 1,727,000
3,000,000 808,000 1,077,000 1,346,000 1,616,000 1,885,000
3,250,000 875,000 1,167,000 1,459,000 1,751,000 2,042,000
3,500,000 943,000 1,257,000 1,571,000 1,886,000 2,200,000
3,750,000 1,010,000 1,347,000 1,684,000 2,021,000 2,357,000
4,000,000 1,078,000 1,437,000 1,796,000 2,156,000 2,515,000
4,250,000 1,145,000 1,527,000 1,909,000 2,291,000 2,672,000
4,500,000 1,213,000 1,617,000 2,021,000 2,426,000 2,830,000
4,750,000 1,280,000 1,707,000 2,134,000 2,561,000 2,987,000

Messrs. Allison, Seitz, Lindahl, Rose, Manley and Sullivan, respectively,
have 28, 24, 15, 24, 28 and 20 years of accrued service under the Plan. An
employee becomes vested in his benefit under the Retirement Plan at completion
of five years of vesting service as defined in the Retirement Plan.

A portion of the benefits shown in the table may be paid from the Company's
Retirement Restoration Plan, rather than from the Retirement Plan, due to
limitations imposed by the Internal Revenue Code that restrict the amount of
benefits payable under tax-qualified plans.

TRANSACTIONS WITH MANAGEMENT

EMPLOYMENT AGREEMENT

As a condition of the merger with UPRG in July 2000, the Company entered
into a three-year employment agreement with Mr. Lindahl. In 2001, Mr. Lindahl
exercised a provision in his employment agreement and retired from the Company
on December 28, 2001. Under the terms of the employment agreement Mr. Lindahl
received the following upon his termination from the Company: (a) guaranteed
annual cash compensation of at least $1,500,000 for the period December 28, 2001
through July 14, 2003; (b) vesting of 83,333 shares of restricted stock, and
vesting of all unvested options; and (c) other perquisites Mr. Lindahl would
have been eligible to receive through July 14, 2003. In addition, since Mr.
Lindahl was eligible to retire from the Company, he received retirement benefits
in accordance with the Company's Retirement Plan and Retirement Restoration
Plan. In the event Mr. Lindahl should become subject to any excise tax imposed
with respect to any payment or distribution made under the agreement, Anadarko
has agreed to reimburse Mr. Lindahl for these taxes. Payments made under this
agreement are included in the summary compensation table on page 10.

CHANGE OF CONTROL ARRANGEMENTS

The Company has entered into key employee change of control contracts with
each of the named executive officers, except for Mr. Lindahl, and with certain
other key executives. These severance contracts have an initial three-year term
that is automatically extended for one year upon each anniversary, unless a
notice not to extend is given by the Company. If a change of control of the
Company (as defined below) occurs during the term of the severance contract,
then the contract becomes operative for a fixed three-year period. The severance
contracts generally provide that the executive's terms and conditions of
employment (including position, work location, compensation and benefits) will
not be adversely changed during the three-year period after a change of control
of the Company. If the Company terminates the executive's employment (other than
for cause, death or disability), the executive terminates for good reason during
such three-year period, or the executive terminates employment for any reason
during the 30-day period following the first anniversary of the change of
control, and upon certain terminations prior to a change of control or in
connection with or in anticipation of a change of control, the executive is
generally entitled to receive the following payment and benefits:

(i) earned but unpaid compensation;

(ii) up to 2.9 times the executive's base salary plus annual bonus
(based on historic annual bonus);

(iii) the Company matching contributions which would have been made had
the executive continued to participate in the Anadarko Employee
Savings Plan and the Savings Restoration Plan for up to an
additional three years;

(iv) the value of any investments credited to the executive under the
Savings Restoration Plan; and

(v) the present value of the accrued retirement benefit under the
Retirement Restoration Plan and the additional retirement benefits,
including retiree medical, which would have been received had the
executive continued service for up to an additional three years.

In addition, the severance contract provides for a continuation of various
medical, dental, disability and life insurance plans and financial counseling
for a period of up to three years, outplacement services and the payment of all
legal fees and expenses incurred by the executive in enforcing any right or
benefit provided by the severance contract. The severance contract also provides
that the executive is entitled to receive a payment in an amount sufficient to
make the executive whole for any excise tax on excess parachute payments imposed
under Section 4999 of the Internal Revenue Code.

As a condition to receipt of these severance benefits, the executive must
remain in the employ of the Company and render services commensurate with his
position. The executive must also agree to retain in confidence any and all
confidential information known to him concerning the Company and its business so
long as the information is not otherwise publicly disclosed.

In addition, pursuant to the Company's stock plans, upon a change of
control of the Company (as defined below):

- Outstanding options and stock appreciation rights that are not vested and
exercisable become fully vested and exercisable.

- The restrictions on any outstanding restricted stock lapse.

- If any performance-based restricted stock awards are outstanding, they
become fully vested and the performance goals are deemed to be earned
unless otherwise provided in the participant's award agreement.

For purposes of the severance contracts and the Company's stock plans, a
change of control is generally defined as:

(1) Any individual, entity or group acquiring beneficial ownership of
20% or more of either the outstanding shares of the Company's common
stock or the combined voting power of the

outstanding voting securities of the Company entitled to vote
generally for the election of directors;

(2) Individuals who constitute the Board on the date hereof cease to
constitute a majority of the Board, provided that an individual
whose election or nomination as a director is approved by a vote of
at least a majority of the directors as of the date hereof will be
deemed a member of the incumbent Board;

(3) Approval by the Company's stockholders of a reorganization, merger
or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition of
assets of another entity, unless following the business combination:

(a) all or substantially all of the beneficial owners of the
Company's outstanding common stock prior to the business
combination own more than 60% of the outstanding common stock of
the corporation resulting from the business combination;

(b) no person, entity or group owns 20% or more of the outstanding
voting securities of the corporation resulting from the business
combination; and,

(c) at least a majority of the board of the corporation resulting
from the business combination were members of the Company's Board
prior to the business combination; or

(4) Approval by the Company's stockholders of a complete liquidation or
dissolution of the Company.

INDEPENDENT AUDITORS

KPMG LLP served as the Company's independent auditors during 2001.
Representatives of KPMG LLP will be present at the meeting to respond to
appropriate questions from stockholders.

OTHER MATTERS

It is not expected that any other matters will come before the meeting.
However, if any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote the
proxy in accordance with their judgment on such matters.

STOCKHOLDER PROPOSALS

An eligible stockholder who wants to have a qualified proposal considered
for inclusion in the proxy statement for the 2003 Annual Meeting must notify the
Corporate Secretary of the Company. The proposal must be received no later than
November 25, 2002.

PROXY SOLICITATION

The Company pays for the cost of preparing, assembling and mailing the
material in connection with the solicitation of proxies. It is expected that the
solicitation of proxies will be primarily by mail but solicitations may also be
made personally or by telephone, email or facsimile by officers and other
employees of the Company without additional compensation. The Company pays all
costs of solicitation, including certain expenses of brokers and nominees who
mail proxy material to their customers or principals. In addition, the Company
has engaged Mellon Investor Services, LLC to assist in the solicitation of
proxies for this Annual Meeting at an estimated fee of $5,000 plus
disbursements.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ SUZANNE SUTER

SUZANNE SUTER
Corporate Secretary

Dated: March 25, 2002
The Woodlands, Texas

SEE ENCLOSED PROXY CARD -- PLEASE VOTE PROMPTLY.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1. Please mark [X]
your votes as
indicated in
this example

Item 1-ELECTION OF DIRECTORS FOR WITHHELD
FOR ALL
Nominees:
[ ] [ ]
01 Ronald Brown
02 John R. Butler, Jr.
03 Preston M. Geren III
04 John R. Gordon

Withheld For: (Write that nominee's name in the space provided below.)

----------------------------------------------------------------------

PLEASE VOTE YOUR PROXY

"By checking the box to the right, I consent to future [ ]
access of the Annual Report, Proxy Statements,
prospectuses and other communications electronically via
the Internet. I understand that the Company may no
longer distribute printed materials to me for any future
shareholder meeting until such consent is revoked. I
understand that I may revoke my consent at any time by
contacting the Company's transfer agent, Mellon Investor
Services, Ridgefield Park, NJ and that costs normally
associated with electronic access, such as usage and
telephone charges, will be my responsibility. Please
disregard if you have previously provided your consent
decision."

Signature Signature Date
----------------------------- ----------------- -------

Please sign as your name appears above. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.

--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o

Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week

Internet and telephone voting is available through 4PM Eastern Time the
business day prior to annual meeting day.

Your Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy
card.

--------------------------------------------------------------------------------
Internet
http://www.eproxy.com/apc

Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Telephone
1-800-435-6710

Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Mail

Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
--------------------------------------------------------------------------------

If you vote your proxy by Internet or by telephone, you do NOT
need to mail back your proxy card.

You can view the 2001 Annual Report on Form 10-K and Proxy Statement on the
internet at www.anadarko.com

PROXY

ANADARKO PETROLEUM CORPORATION

SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of the Stockholders
April 25, 2002

The undersigned stockholder hereby appoints ROBERT J. ALLISON, JR. AND SUZANNE
SUTER, and any one of them, with power of substitution and revocation, the
attorneys of the undersigned to vote all shares registered in the name of the
undersigned for the election of directors (unless such authority is withheld)
and on all other matters which may come before the 2002 Annual Meeting of
Stockholders of Anadarko Petroleum Corporation to be held on Thursday, April 25,
2002 at 10:00 a.m. (CDT) or any adjournment thereof.

--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o

ANADARKO PETROLEUM CORPORATION

2002 Annual Meeting Of Stockholders
April 25, 2002

The Cynthia Woods Mitchell Pavilion
2005 Lake Robbins Drive
The Woodlands, Texas

For directions go to http://pavilion.woodlandscenter.org/ and click on
directions or visit the Company website at www.anadarko.com

Registration Begins at 9:00 a.m.
Meeting begins 10 a.m.

ADMITTANCE TICKET

This ticket is valid to admit the stockholder to the 2002 Annual Meeting.
Seating is limited and admission to the meeting will be on a first-come,
first-served basis. For wheelchair and hearing impaired seating, please see a
host/hostess for assistance.

You will be asked to present valid picture identification, such as a driver's
license or passport. Cameras, recording devices and other electronic devices
will not be permitted at the meeting.

Please bring this ticket with you. It is required for admittance.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1. Please mark [X}
your votes as
indicated in
this example