Houston-based independent producer Anadarko Petroleum Corp. said last week its board gave thumbs-up to a company plan to raise its capital budget by 10% to $2.2 billion for the year, a move that will be largely funded by anticipated proceeds from $320 million in asset sales and company cash flow.

“The higher capital program will allow us to take advantage of additional delineation and development opportunities resulting from our exploration successes this year in Canada and the U.S., as well as restart our exploration program in Algeria,” said Anadarko President and CEO John Seitz. He noted the sales were part of Anadarko’s ongoing effort to boost the quality of its portfolio by divesting itself of “low-margin, and/or moderate-to-low-growth assets and re-investing the proceeds in higher-margin, higher-growth opportunities.”

Anadarko closed on the sales of non-core producing assets in South Texas and South Louisiana for $60 million during the second quarter ended June 30, the company reported. Further, Anadarko Canada Corp., a wholly owned subsidiary, has agreed to sell its heavy oil assets in eastern Alberta in several separate transactions for a total of about US$160 million. The sales of the properties, which include approximately 27.5 million barrels of net proved oil reserves at mid-year, are expected to close in the fourth quarter.

Anadarko said it planned to sell another $100 million of properties in the near future.

As a result of the asset sales and the recent decisions not to process gas for natural gas liquids recovery in the East Texas Carthage plant and part of the Rockies due to poor processing economics, Anadarko said it was reducing its volume guidance for the year to 196 million barrels of oil equivalent (MMBoe) from 199 MMBoe.

Seitz projected the reduction in volumes should reduce 2002 earnings by only one cent per share, and the company’s cash flow by about 7 cents per share.

Anadarko forecasts its net income for the third quarter will be $152 million, or 60 cents a share. It said it anticipates a net income of $737 million for the entire year, or $2.89 a share.

The company projects it will produce 1.73 Bcf/d of natural gas during the third quarter, of which about 1.37 Bcf/d will be in the United States and the remainder in Canada. It estimates third-quarter crude oil production at 203 million barrels a day (MBbl/d), of which 79 MBbl/d will be in the U.S., 37 MBbl/d in Canada and 65 MBbl/d in Algeria.

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