Anadarko Petroleum Corp., which has taken a roller-coaster ride this year following the surprise resignation of its CEO in March and two announced cuts to its production forecasts, on Tuesday revealed it will shut down an undisclosed number of onshore U.S. drilling rigs to remain within budget. Several rumors Tuesday remained unsubstantiated, but at least one analyst suggested in a research note that the huge independent may be for sale.

Headquartered north of Houston in The Woodlands, Anadarko has scheduled its regular second quarter earnings call on Friday morning. However, unsubstantiated rumors began leaking out of the company Tuesday afternoon after analyst Allen Brooks of CIBC World Markets wrote in a research note that as many as 35 of Anadarko’s North American working rigs, or 60% of the company’s total rig count, may be shut down.

Brooks, who could not be reached for comment, said in the note that the rig shutdown may be in preparation for a potential sale. However, Teresa Wong, an Anadarko spokeswoman, affirmed there would be some U.S. onshore rigs shut down, but said the company would “not respond to rumors, but we will always do what is best for the shareholders.”

If Anadarko is shutting down some of the U.S. onshore rigs, it would be a turnaround from the strategy announced during an analyst conference in March, when the company said it would realign its resources to concentrate on U.S. onshore plays (see Daily GPI, March 21). However, because Anadarko’s budget is “front loaded,” said Wong, it already has spent a “good deal of the budget” this year, including its acquisition in June of 26 Amerada Hess Corp.’s offshore Gulf of Mexico fields for $260 million (see Daily GPI, June 10).

According to the company’s web site, as of July 7, Anadarko had a total of 76 North American rigs in operation, including 59 it was working as operator and 17 as non-operated rigs. Of that count, 34 were located in Texas and Louisiana, five were in the Mid-continent, seven were in the Permian Basin, 13 were in western states, one was on the North Slope of Alaska, 10 were in Western Canada and six were offshore. It also has activity ongoing offshore Nova Scotia and in California.

Anadarko watchers have seen some big news come out of the company so far this year. Three days after its upbeat analyst conference last spring, Anadarko’s well respected president and CEO John Seitz “elected to resign” (see Daily GPI, March 27). Chairman Robert J. Allison Jr., 64, then stepped back into the CEO role, but at the time it was only considered a temporary fix by analysts. Allison had earlier held the chairman and CEO roles at Anadarko between 1986 and 2001.

Following Seitz’s resignation, analyst Irene Haas, who covers Anadarko for Sanders Morris Harris, predicted that changes in the company would be forthcoming, especially because Allison was then 64, and Haas thought the company had a mandatory retirement age of 65. “Anadarko will have to find a CEO either internally [or] externally, or else the company could be put up for sale as a third option,” Haas said. However, Wong said Tuesday that while Anadarko’s board of directors has a mandatory retirement age of 70, there is no such limit on the chairman and CEO roles.

Haas, who said she could not comment on any of the sale rumors, told NGI late Tuesday that most of the news at this point was on the company’s message boards. However, she expects to hear “a lot of news” when the company issues its quarterly report this week.

In June, and for the second time this year, Anadarko lowered its 2003 targets for crude oil and natural gas sales because of production problems in three of its key drilling areas: the Gulf of Mexico, Algeria and Qatar (see Daily GPI, June 9). The company said then that sales volumes this year are estimated to be 190 MMboe, including 46 MMboe for the second quarter, down from an earlier forecast of 200 MMboe for the year and 48 MMboe for the quarter.

Allison said then that the company usually was able to offset downside performance with upside production from other fields. “Production in other areas is on target or ahead of forecast this year, but unfortunately, the magnitude of the shortfalls, particularly in the Gulf of Mexico, is too large to offset.” Allison also said that the “production issues in the Gulf of Mexico will affect us next year as well.”

Anadarko is ranked the eighth largest natural gas producer in North America and currently is the 11th largest publicly traded oil and gas producer in the world, with assets of $18 billion. It was 232 on the Fortune 500 list in 2002. Last year, the independent produced 197 MMboe, and its year-end proved reserves were 2.33 billion boe.

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