Anadarko Petroleum Corp., which is a partner in BP plc's doomed Macondo well in the deepwater Gulf of Mexico (GOM), said Thursday full-year 2010 sales volumes and projected capital spending remain unchanged, but it may shift some of its money to onshore projects.
Guidance for sales volumes this year remains 230-234 million boe, with 57-60 million boe still achievable in 2Q2010, the Houston-based producer said. Capital spending for this year, including expensed geology and geophysics, also should range between $5.3 billion to $5.6 billion.
"We want to assure our stakeholders that we expect to meet our 2010 production targets and have already taken a number of actions to protect the value of our portfolio during the moratorium in the Gulf," said CEO Jim Hackett.
"Although our Gulf of Mexico drilling activity has been suspended due to the [federal] moratorium, we are evaluating opportunities to reallocate some of the 2010 capital from the Gulf to other areas of our global portfolio, including our numerous onshore liquids-rich opportunities, and we remain committed to our worldwide exploration, appraisal and development programs."
Anadarko "shares everyone's desire to ensure the safety of deepwater drilling activity. Deepwater exploration, development and production in the Gulf are vitally important to our nation's economy and energy security. These activities must be conducted safely and in a manner that protects the environment." Anadarko is a nonoperating partner in the Macondo well with a 25% stake. Mitsui Ltd. holds a 10% interest.
All of Anadarko's drilling operations in the GOM have been suspended as required under the Department of Interior's announcement late last month (see NGI, May 31). Prior to the moratorium, the company was conducting operated appraisal and completion activities at several deepwater wells, which include:
"The company's management has already taken a number of actions to protect the interest of its shareholders during the moratorium," Anadarko said. A force majeure has been declared on three of its contracted GOM rigs, and it has one remaining GOM rig under contract. While the offshore moratorium is in effect, Anadarko plans to use the remaining rig for completion, workover and other nondrilling activities on existing wells.
"We remain committed to our strategic objectives, and we will not hesitate to take further action if necessary to protect the company and its financial health," said Hackett. "Furthermore, as a nonoperating interest holder in the Macondo well, we will also take appropriate steps to protect the interests of our stakeholders as facts become clearer on the root cause of the event. We also expect to resume our exploration, appraisal and development activities in the Gulf as soon as we receive greater clarity and the authorization to proceed."
Moody's Investors Service said Friday it had revised to negative from stable the outlook on the Baa3 senior unsecured rating of Anadarko and its guaranteed subsidiaries, reflecting "the considerable uncertainty associated with Anadarko's potential 25% share of the clean up costs and financial liabilities" stemming from the deepwater Macondo well explosion and oil spill. Anadarko is a 25% owner of the well with a non-operated working interest.
Moody's notes that BP said on June 1 that its total clean-up costs already stand at $990 million, but at this time it is not known how much of these and continuing costs will be allocated to Anadarko. Therefore, "it remains difficult at this stage to assess the full extent of the costs and business impact of this accident on Anadarko's financial position and liquidity."
Moody's said Anadarko holds insurance to cover the first $178 million of its share of clean-up costs and another $1.6 billion is available from the Federal Oil Spill Liability Trust Fund. Additionally, the company has approximately $3.5 billion of cash on hand, $1.3 billion of available revolving credit, and no debt due through the rest of 2010. Over the next two years, debt due totals $707 million in 2011, and $170 million in 2012. In addition, the company has other significant financial resources and flexibility. In addition to tapping its most liquid resources, Anadarko could, among other things, re-allocate capital spending, sell assets, delay spending, and farm-out assets, as necessary, to maintain financial flexibility.
Moody's does not expect Anadarko's near-term production growth to be affected by the deepwater moratorium in the Gulf since it can shift exploration and development plans to other parts of the world for the next two-to-three year horizon.
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