ANADARKO PETROLEUM CORPORATION 1999 STOCK INCENTIVE PLAN PERFORMANCE UNIT AGREEMENT

                                                                                      ANADARKO PETROLEUM CORPORATION

                                                                                                       1999 STOCK INCENTIVE PLAN

                                                                                                   PERFORMANCE UNIT AGREEMENT

THIS PERFORMANCE UNIT AGREEMENT (the "Agreement") dated _______ ____, 200__, is by and between Anadarko Petroleum Corporation (the "Company") and ____________________ ("Employee").

W I T N E S S E T H:

ARTICLE 1

GRANT

       1.1      Grant .    Pursuant to the Company's 1999 Stock Incentive Plan (the "Plan") and subject further to the terms and conditions herein set forth, the Company and Employee enter into this Agreement pursuant to which Employee may earn up to {2 * Target} Performance Units. Each Performance Unit represents the value of one share of the $0.10 par value common stock of the Company ("Performance Units") . Upon the Company's achievement of pre-determined objectives for a specified performance period, the Company will pay out to Employee some or all of the Performance Units as hereinafter described. The Compensation and Benefits Committee of the Company's Board of Directors (the "Committee") reserves the right, in its sole discretion, to make such payment in cash, shares of Company common stock, or a combination of both.

ARTICLE 2

PRE-DETERMINED PROVISIONS

       2.1      Performance Period . Pursuant to this Agreement, the three-year period beginning on January 1, 2006 and ending on December 31, 2008 will be the performance period (the "Performance Period").

       2.2      Performance Awards. Employee may earn a target of (a) {1/2 * Target} Performance Units, up to a maximum of {Target} Performance Units during the Performance Period with respect to the First Performance Objective, and (b) {1/2 * Target} Performance Units, up to a maximum of {Target} Performance Units during the Performance Period with respect to the Second Performance Objective. In no circumstances may Employee earn more than {2 * Target} Performance Units during the Performance Period.

       2.3.1    First Performance Objective . The number of Performance Units to be earned by Employee for the Performance Period with respect to the First Performance Objective will be determined at the end of the Performance Period by comparing the Company's total shareholder return ("TSR") over the Performance Period to the TSRs of the Peer Companies' for the same Performance Period. For purposes of such comparison , TSR will be calculated as follows:

Average per share Stock Price for the last 60 Business Days of the Performance Period

minus

Average per share Stock Price for the 60 Business Days preceding the beginning of the Performance Period

plus

Dividends (cash or stock) paid per share over the Performance Period

the above total of which is divided by

Average per share Stock Price for the 60 Business Days preceding the beginning of the Performance Period

       "Stock Price" is defined as the average of the high and low prices for one share of the Company's common stock in one trading day and shall be adjusted for stock splits, spin-offs, mergers or any other corporate securities transaction affecting Stock Price, as determined by the Committee.

       "Business Days" are defined as any days the New York Stock Exchange is open and shares of stock are actively traded.

       2.3.2    Peer Companies . For the Performance Period, the following companies are the peer companies ("Peer Companies") to be used in the award determination with respect to the First Performance Objective. Any Peer Company that ceases to be a publicly traded entity on a recognized stock exchange during the Performance Period will be removed from the Peer Company list. The Committee may evaluate for inclusion or exclusion any Peer Company that merges with or is acquired by another Peer Company during the Performance Period. No companies may be added to the list during the Performance Period.

        Amerada Hess Corporation

        Apache Corporation

        Burlington Resources, Inc.

        ConocoPhillips

        Devon Energy Corporation

        EOG Resources, Inc.

        Kerr-McGee Corporation

        Marathon Oil Corporation

        Noble Energy, Inc.

        Occidental Petroleum Corporation

        Pioneer Natural Resources Company

       2.3.3    Award Determination for First Performance Objective. At the end of the Performance Period, the Peer Companies and the Company shall be ranked together based on their TSR for the Performance Period from the highest TSR being number 1 to the lowest TSR being the number of Peer Companies, including the Company, remaining in the group at the end of the Performance Period. Based on the Company's relative TSR rank amongst the Peer Companies for the Performance Period, Employee will have earned Performance Units as determined by the Company's percentile rank as follows:

                        (A)   If the Company's relative TSR rank is equal to or above the 50 ^th percentile of the Peer Companies, Employee will have earned and the Company will issue to Employee a number of Performance Units equal to {1/2 * Target} multiplied by two times the Company's percentile rank as determined under the matrices of Exhibit I.

                        (B)   If the Company's relative TSR rank is equal to or greater than the 50 ^th percentile and the Company's TSR is less than the TSR of the Peer Company immediately above the Company in the relative ranking by not more than one percentage point, then the payouts for both rankings (the Company's ranking, as determined under the matrices of Exhibit I, and the ranking of the Peer Company immediately above the Company in the relative ranking, as determined under the matrices of Exhibit I) will be averaged to determine the number of Performance Units which will be earned by Employee.

                        (C)   If the Company's relative TSR rank falls directly below the relative TSR rank of a Peer Company whose rank represents the first payout level for the Performance Period in which the number of shares earned is greater than zero (as depicted in the matrices of Exhibit I, based on the number of Peer Companies included under Section 2.3 of this Agreement), and the Company's TSR is less than the TSR of such Peer Company by not more than five percentage points, then the Company will issue to Employee a number of Performance Units equal to {1/2 * Target} multiplied by two times the percentile rank of the first payout level. The Committee may reduce such award in its discretion, but in no event may it increase the award above the first payout level.