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Colorado Flooding to Cost Anadarko 2.5M Boe

As one of its most important operating areas, the greater Wattenberg area in northeastern Colorado, which is still struggling to recover from last month's historic flooding, will lower Anadarko Petroleum Corp.'s annual sales volumes this year by an estimated 2.5 million boe, CEO Al Walker said Thursday.

While damaged roads, bridges, rail and other infrastructure are hindering the company's ability to get going full speed again in the Wattenberg, Walker said Anadarko still should meet its overall annual sales volume guidance range of 281-287 million boe. There will be "temporary delays" in the company's capacity expansion plans for the area where it has nearly 6,000 wells and extensive related facilities.

"The company is experiencing disruptions to its drilling, completions and construction activities in the area," said Walker, calling the company's Wattenberg horizontal drilling program one of its most important areas of operation. "As conditions improve, we expect to safely accelerate activity in the field to enable its tremendous production growth to continue."

Anadarko still plans to drill 350 to 400 horizontal wells in 2014, along with completing infrastructure expansions throughout the field, Walker said. The company also has 2,500 storage tank facilities and 3,200 miles of pipelines in the greater Wattenberg. Because of the floods, Anadarko shut in 675 wells in the area.

For comparison, another major operator in the area, Encana had 397 flood-related shut-in wells initially, and a Denver-based spokesperson told NGI Friday that the total of shut-in wells was down to 61, including 21 that were shut in in recent days at the request of Anadarko to inspect and repair flood-damaged gathering lines.

As of last Wednesday, the Colorado Oil/Gas Conservation Commission (COGCC), which is overseeing the inspection, identification and mitigation of the oil/gas wells post-flooding, reported it was tracking 15 notable releases, or spills, bringing the total of oil releases to 1,027 bbl. This is the equivalent of more than three conventional-sized 300-bbl storage tanks.

Anadarko's Walker praised his own employees and people generally for "many selfless actions" to help in the aftermath of the flooding. "Words cannot express the sadness we feel for the families who have lost loved ones, homes and business property," said Walker, adding that his company made a $500,000 donation to the American Red Cross Colorado Flood Victims Relief Fund.

At the Johnson Rice Energy Conference Thursday, Anadarko's Danny Brown, vice president for operations, told financial analysts that Wattenberg is likely the company's biggest and most valuable onshore asset, but it is still recovering from last month's storms.

"We have a lot of roads that have washed out and will limit our ability to get back in and out, but eventually we'll get in, get stuff fixed and move on." 

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