Anadarko Petroleum Corp. on Wednesday unveiled a capital expenditure (capex) plan for this year of $7.2-7.6 billion, with most of the funds directed to the U.S. onshore and Gulf of Mexico (GOM). The forecast capex for 2013 is sharply higher from a projection set last March of of $6.6-6.9 billion.
Anadarko earlier this month said it delivered record sales volumes in 2012 of 268 million boe, at the high end of its guidance, and it replaced 162% of its reserves. Proved reserves at the end of 2012 were estimated at 2.56 billion boe, up from 2.54 billion boe in 2011.
“With the outstanding momentum we established in 2012 and the opportunities our deep portfolio provides, we expect 2013 to be one of the best years in our company’s history,” CEO Al Walker said. “Our 2013 capital investments will focus on projects that generate rates of return between 30% and more than 100% in the current commodity-price environment, while spending within cash flow.”
This year’s total sales volumes are projected to increase by around 5%, “with the year/year increase comprised almost entirely of higher-margin oil sales volumes,” Walker said. “The projected increase in oil sales volumes will be largely driven by accelerated activity in our Wattenberg and Eagle Ford horizontal programs and the anticipated ramp up of oil volumes during the year at our El Merk facilities in Algeria.”
U.S. onshore projects have been allocated the lion’s share of the capex at 60%, up from 55% in 2012. The Wattenberg Field in Colorado remains at the top of the onshore prospect list. The unit in 4Q2012 produced more than 103,000 b/d, and liquids output jumped 17%. Wattenberg output was 22% higher year/year; the horizontal well count jumped to 172 in late 2012 from 100 in 3Q212. It now has 11 rigs operating in the play.
Anadarko also has drilling operations underway in East Texas, as well as in the Marcellus, Utica and Eagle Ford shales. In total, domestic onshore sales volumes this year are project to increase an estimated 10% from 2012, with oil volumes higher by about 30,000 b/d.
GOM projects in the deepwater would take another 15% of this year’s spend, up from 10% in 2012. Plans are to participate in six to eight exploration and appraisal wells this year. Ongoing activity is planned in the Shenandoah “mini-basin,” where Anadarko said it has “already encountered encouraging results” from an appraisal well. A nearby Coronado project also is being developed, and results from the Yucatan prospect are expected by the end of March.
This year’s GOM capex “reflects the benefits of the $556 million carried-interest agreement for the Lucius project, which is expected to fully carry Anadarko’s capital costs through first production,” the company said. Last summer Japan’s Inpex Corp. purchased a 7.2% stake in the Keathley Canyon prospect for $556 million (see Daily GPI, Aug. 15, 2012). Anadarko holds a 27.8% stake in the emerging prospect. Other stakeholders are Plains Exploration & Production Co. (23.3%), ExxonMobil Corp. (15%), Apache Corp. subsidiary Apache Deepwater LLC (11.7%), Brazil’s Petroleo Brasilerio (9.6%) and Italy’s Eni SpA (5.4%).
The GOM capital program this year also includes assumptions for a similar potential carry arrangement associated with the Heidelberg development, which is slated to be sanctioned later this year. To further maximize cost efficiencies at Lucius and Heidelberg, Anadarko is implementing a “design one; build two” approach as it moves forward to construct two truss spars, each with capacity of 80,000 b/d of oil. Lucius is on schedule to achieve first production in 2014, and Heidelberg is expected to ramp up in 2016.
“Accelerating value by advancing our high-margin deepwater and international oil and liquefied natural gas mega projects remains a priority in 2013, and we expect to continue pursuing carry arrangements and opportunistic divestitures to further enhance the capital efficiency of our portfolio,” said Walker. “We expect to drill approximately 25 deepwater exploration and appraisal wells this year, including high-potential prospects in the Gulf of Mexico and three potentially play-opening international opportunities.”
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