Anadarko in Gulf With Texaco, Has Strong 2Q
Anadarko Petroleum Corp. is gaining Gulf of Mexico sub-salt
exploration rights through an agreement with Texaco Exploration and
Production Inc. Anadarko also just announced significantly improved
second quarter results and a nearly 60% boost to its current
capital spending program.
Anadarko will acquire rights to future exploration in certain
depths on 82 lease blocks in which Texaco has interests. The tracts
are located offshore Louisiana, where water depths range from 85 to
2,400 feet. The 82 blocks make up about 400,000 gross acres.
"The agreement with Texaco represents an important addition to
Anadarko's sub-salt exploration portfolio," said John N. Seitz,
Anadarko president. "This relationship doubles our acreage in the
sub-salt trend, which was one of our major objectives for 1999. We
are planning to move aggressively on these blocks with seismic and
drilling activities. With this agreement, we now have more running
room in this very successful and economic play."
Anadarko's working interests in new prospects that it identifies
and drills will vary depending on current Texaco partners. As part
of the agreement, Texaco has the option to retain a working
interest in each exploratory prospect by participating in the
initial exploration well drilled by Anadarko. Texaco has an average
working interest of 50% in the 82 blocks, which are subject to the
agreement. Financial terms of the agreement were not disclosed. The
transaction is expected to close by the end of July.
"This agreement allows Texaco to increase its exploration
activity in the Gulf of Mexico and leverage the assessment of this
sub-salt acreage earlier than anticipated," said Matt Cabell, vice
president for exploration of Texaco's Gulf unit.
Encouraged by improved commodity prices and cost-cutting
initiatives, Anadarko upped its capital spending budget by nearly
60% from $410 million to $650 million.
"We plan to accelerate activity in both exploration and
development-primarily gas development projects," said Robert J.
Allison Jr., Anadarko CEO.
"We now expect that our production volumes in 1999 will be at
least level with 1998. However, today's higher commodity prices
should give us significantly better financial results this
year-cash flow could be 20% higher than 1998. And we're moving
quickly to reinvest these dollars in projects that will begin to
contribute to Anadarko's production volumes over the next several
Anadarko's second quarter gas production averaged 461 MMcf/d,
essentially level with the same period in 1998. The company's
wellhead price for gas was $1.95/Mcf for the second quarter of
1999, off slightly from $1.98/Mcf a year ago. Anadarko reported net
income of $8 million on $161.5 million of revenues in 2Q99,
compared to net income of $2.7 million on $137.6 million of
revenues in 2Q98.
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