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Anadarko Plans Spending Spree on Gas Prospects

Anadarko Plans Spending Spree on Gas Prospects

Strong second-quarter earnings and cash flow and expectations that gas prices will remain high for some time prompted Anadarko Petroleum to raise its 2000 spending program by 34% to $1.5 billion.

The raise amounts to a $384 million increase over the combined total of Anadarko's previously announced capital budget of $766 million and the $350 million remaining from the 2000 capital budget of Union Pacific Resources, with which Anadarko recently merged.

Much the spending will be on North American gas prospects, the company said. "This increase in capital spending will allow us to accelerate our exploration, development and exploitation programs on our outstanding portfolio of gas properties," said Chairman Robert J. Allison. "We expect this to result in continued increases in earnings and cash flow. The higher prices we're now seeing for natural gas will be with us for a long time."

Principal targets during the remainder of the year include Anadarko's natural gas projects in East Texas and Louisiana, its gas assets in western Canada and gas and oil projects on its shelf, sub-salt and deep-water properties in the Gulf of Mexico. Anadarko also will pursue selected high potential exploration projects in North America and internationally.

The company said it plans to spend $300 million on exploration, $950 million on development (nearly triple the 1999 budget on development), $50 million on acquisitions, and $200 million on capital interest and overhead.

The new budget represents a 121% increase from its capital budget for 1999, which was $680 million, and a 64% increase from the $917 million it spent in 1998. Anadarko currently holds 1.94 billion (11.64 Tcfe) of proved reserves.

Rocco Canonica

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