Continuing on with its 2003 exploration and production strategy despite a few recent company speed-bumps, Anadarko Petroleum Corp. announced a natural gas discovery at its Jubilee prospect in the Eastern Gulf of Mexico. The Atwater Valley 349 No. 1 well is the first well drilled in Anadarko’s Eastern Gulf of Mexico exploration program.

The Houston-based company said the discovery well was spudded in February in 8,800 feet of water, about 200 miles southeast of New Orleans. It encountered a total of 83 feet of net pay and was drilled to the target depth of 18,310 feet using Transocean’s Deepwater Millennium drillship. Anadarko estimates the field size to be 40 to 50 million boe. Anadarko holds a 100% interest in the Jubilee discovery and adjacent blocks.

“This discovery is encouraging for three reasons,” said Anadarko CEO Robert J. Allison, Jr. “First, we validated our geologic model and seismic imaging technology by finding productive sands exactly as predicted. Second, this provides a good start to our Eastern Gulf of Mexico exploration program, which targets estimated unrisked potential of about 2 billion boe. And third, the pay zone found at Jubilee is one of the primary prospective intervals in our nearby Hawkeye prospect and all other prospects on our Eastern Gulf blocks.”

The exploratory well announcement comes as the latest move in what has been a very active few weeks for the company. Following on the March announcement of CEO John Seitz’s unexpected resignation, Anadarko countered with some good news in April. The company last week said that it had updated its first quarter 2003 financial guidance, increasing its earnings estimate to $1.35 per share (diluted) from $1.15 per share announced previously and its cash flow estimate to $3 per share from $2.60 per share (see NGI, March 24; March 31; April 7).

With the Jubilee test well completed, Anadarko said it expects to have the play commercially producing as soon as hub facilities are established in the area. It will soon begin drilling its high-potential Hawkeye prospect located at Lloyd Ridge Block 360 in 9,100 feet of water. Anadarko also holds a 100% working interest in Hawkeye.

Also in the area, the company has committed to a third drilling slot on the Deepwater Millennium drillship for possible delineation or to drill another deepwater prospect in the area. Anadarko said it has a 100% interest in 38 blocks with 17 identified prospects in the Eastern Gulf

“We’ve assembled a strong acreage position in the Gulf; we’ve completed extensive technical analysis; and we’re excited to put our drilling program into action,” Allison said. “We have the prospects and the expertise to drill these deepwater wells and achieve excellent economics. The Jubilee well reached total depth in less than 30 days and was drilled at a cost of about $15 million, which is significantly below our pre-drill estimate of $19.3 million.”

Anadarko’s 2003 operation plan calls for it to drill 40 wells in the Gulf, 10 of which are exploration wells. On the whole, the company holds a total of 374 leases in the Gulf with 165 located in deep water. It also holds options to earn working interests in an additional 122 blocks.

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