Higher commodity prices and improved operational performance have led Anadarko Petroleum Corp. to boost both its capital spending and production guidance this year. Some of the new capital will be directed to Anadarko's emerging play in the Greater Natural Buttes area of northeastern Utah, where the producer has identified more natural gas resources.
The Woodlands, TX-based independent plans to direct most of new money to develop leaseholds in the Rockies, Midcontinent and in the Appalachian Basin, as well as in the deepwater Gulf of Mexico (GOM). Anadarko estimated that it will spend $5.1 billion for exploration and production activities this year; it previously said it would spend $4.9 billion in 2008. With the new funds, 2008 production volumes are expected to range between 207 million boe and 212 million boe, ahead of a previous forecast of 205-210 million boe. The higher spending also would assist the independent in raising its anticipated reserve bookings by 10% -- to at least 250 million boe at the same reserve replacement cost target.
"Anadarko is accelerating the development, production and value of our substantial inventory of nearer-term growth projects," said CEO Jim Hackett. "Stronger-than-anticipated commodity prices and the recently announced divestitures of the Peregrino field offshore Brazil and the Kaskida Unit in the deepwater GOM have created an opportunity to increase the company's capital expenditures in 2008. We expect the additional capital to enhance our operating metrics and generate stronger production volumes and reserve adds."
In addition to the anticipated double-digit production growth in the Rockies, Anadarko will expand its development in the Texas and Midcontinent areas, which "offer higher-margin, lower-risk production volumes in the near term," said Hackett. "We also plan to direct a portion of the increased capital toward exploration drilling in the emerging Marcellus Shale area in the Appalachian Basin of Pennsylvania where we have access to approximately 500,000 gross acres in the fairway of the play. Separately, we expect to direct additional capital toward the enhancement of our acreage position in the deepwater GOM and our midstream infrastructure onshore."
Anadarko, which is one of Utah's top producers, said it has found an additional 2.3 Tcfe of low-risk resources in the Greater Natural Buttes area of the Uinta Basin by expanding and improving the performance of its 20-acre down-spacing activities and from new 10-acre infill drilling opportunities. Including the company's proved reserves of 1.4 Tcfe associated with Greater Natural Buttes, Anadarko now estimates that total resources in the area are about 9.2 Tcfe. Combined, Anadarko and subsidiary Kerr-McGee Oil & Gas Onshore LP produced more than 27% of Utah's gas volumes in 2006 with 98.78 Bcf (see NGI, July 30, 2007).
Last month Anadarko announced plans to develop up to 3,000 U.S. onshore development wells in 2008. About 85% were scheduled to be drilled in the Greater Natural Buttes, Wattenberg, Powder River Basin and other areas in the Rockies, and 15% are scheduled for the company's Southern region, which includes the Delaware Basin, eastern Chalk and Carthage areas of Texas (see NGI, Feb. 11). The independent also is working on the second-phase expansion of the Chapita plant in Greater Natural Buttes, which will add a cryogenic processing facility to double Chapita's current processing capacity to 500 MMcf/d.
In the offshore this year, Anadarko expects to sanction and begin booking reserves associated with two of its substantial deepwater discoveries -- the Jubilee field offshore Ghana and Tonga West in the GOM. Both fields are set to ramp up as early as 2010.
"These announcements are indicative of the robust nature of Anadarko's resource pipeline," said COO Karl Kurz. "We began 2007 with approximately 4 billion boe of net risked captured resources. We booked approximately 250 million boe as proved during 2007 and divested approximately 350 million boe of net risked captured resources." He said that as a result of its discoveries offshore and in the Greater Natural Buttes, "we've more than replenished the 4 billion boe of lower-risk development opportunities."
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