Anadarko Petroleum Corp. on Friday reported lower production volumes for the quarter compared with a year ago, and upped its capital budget for this year by 9% after logging exploration successes in the Gulf of Mexico, Canada and Algeria. Meanwhile, junior independent Southwestern Energy Co. also reported lower production numbers, but it too increased its spending for the year on expected drilling successes.

For Anadarko, North American natural gas volumes of 1.7 Bcf/d were 6% lower than a year earlier because of a 10% decline in U.S. production, which was partly offset by a 12% increase from Western Canada. Anadarko’s realized average natural gas price in the first quarter was $4.62/Mcf, more than double that of a year ago. Oil production in the quarter also was down, standing at 173,000 bbl/d, which was 18% lower than 1Q02. However, realized oil prices were 54% higher than last year, at $28.59/bbl.

“We expect production volumes to build each quarter throughout the year, as we bring on additional production in the Gulf of Mexico, Canada, Qatar and the Lower 48,” said CEO Robert Allison said. “Total volumes in the fourth quarter of this year should be about 20% higher than in the first quarter. We’re still expecting 2003 volumes to be about 5% higher than last year’s volumes, adjusting for the effect of our 2002 property sales. Next year’s volumes are forecast to increase 12% over 2003 levels.

Allison said this year was off to a “great start” despite lower sales volumes from last year. “Our first quarter performance was stronger than we had forecast, both operationally and financially. We had some nice discoveries in the Gulf of Mexico, Canada and Algeria, and we still have a number of high-impact exploration wells drilling that will be completed early in the second quarter.”

Strong commodity prices in the quarter allowed the company to fund an “aggressive” exploration and development drilling program, still allowing excess cash flow and further strengthening its balance sheet, he added.

During the first quarter of 2003, sales volumes totaled 45 MMboe, or 498,000 boe/d, down 10% from the first quarter of 2002 because of several factors, said the company. Anadarko divested of nearly 7 MMboe of annual production in North America, mostly heavy oil in Canada last year. Also, the company has shut in a Qatar oil field since February as it installs a new production facility. Sales were also affected by higher oil prices in Venezuela and cost recovery issues in Algeria.

Southwestern, also headquartered in Houston, reported gas and oil production for the quarter was 8.9 Bcfe, compared to 10.3 Bcfe a year ago and 9.5 Bcfe for 4Q02. Southwestern said the decreases resulted from declines in its South Louisiana properties during the last half of 2002, combined with its sale of Mid-Continent properties in November.

” We expect our production to increase during the remainder of the year as we begin to see the impact of accelerating the development drilling at our Overton Field in East Texas and as we continue to execute our capital plan in our other core operating areas,” the company said in a statement. “Our 2003 oil and gas production target is 42-to-44 Bcfe, compared to 40.1 Bcfe produced during 2002.”

Southwestern, like Anadarko, is also upping its capital budget this year, after the board of directors authorized an increase in exploration and production to $150 million from $137.1 million. Total planned capital expenditures this year will be approximately $158.6 million. The new capital will target six additional wells in East Texas as well as additional drilling in the Arkoma Basin in Arkansas.

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