HOUSTON (Dow Jones Newswires), Feb. 1, 2011
Anadarko said that in the fourth quarter it became the largest oil-and-gas producer in oil-rich Eagle Ford Shale in Texas, increasing output by six-fold compared with the same period a year earlier.
Anadarko's Eagle Ford production, which is about 75% oil, gave a clear indication of the potential in North American shale regions, said analysts at Tudor, Pickering, Holt & Co. It's also one of the first signs that output from unconventional resources onshore the U.S., which has already catapulted domestic natural supplies, could also have a significant impact in North America oil supplies in years to come.
Anadarko's Eagle Ford fourth-quarter production of 27,000 barrels of oil equivalent per day, along with output increases from the company's Rocky Mountain operation and the Marcellus Shale in Pennsylvania, helped the Houston area-based company to increase 4% quarterly production to 608,000 barrels of oil equivalent per day.
Anadarko said total 2010 annual production totaled a record 643,000 barrels of oil equivalent per day, up 7% from a year earlier and about 3% above its previous guidance to investors. Anadarko also reiterated its 2011 production guidance of 240,000 to 250,000 barrels of oil equivalent per day.
Anadarko is expected to continue raising oil shale production as the company "keeps the pedal down on oily assets," Tudor, Pickering, Holt said.
Speaking to analysts in a conference call, Anadarko Chief Executive Jim Hackett said the production growth the company has seen in areas such as the Eagle Ford is "phenomenal" and that high oil prices are making drilling there highly profitable. Anadarko has identified more than 2,000 well sites and it plans to ramp up to 10 rigs by the end of the first quarter from two rigs at the beginning of 2010, Hackett said. Anadarko has dramatically improved production from the Eagle Ford in part because its drilling operations have become significantly more efficient, he said.
Anadarko CEO said the company is progressing talks to enter into a joint venture agreement with an undisclosed partner in the Eagle Ford. The deal is expected to be similar to the $1.4 billion agreement the company completed in the first quarter of last year in the Marcellus Shale in Pennsylvania, Hackett said. The company didn't provide details of the transaction, but UBS analysts said in a note to clients they expect the joint venture to be one third of Anadarko's interest in the Eagle Ford for a price higher than $15,000 per acre, or 50% higher than the price of previous transactions in the area, UBS says.
Separately, Hackett said its Jubilee field in Ghana is producing around 50,000 barrels of oil per day from four wells and that the company expects to ramp up output to a capacity of around 120,000 barrels per day by midyear. Jubilee started producing oil in December.
Anadarko said it has submitted drilling-permit applications to explore for oil and gas in the deep water of the Gulf of Mexico, but that the process is advancing slowly as the government is being meticulous about the oil-spill response plan companies have to file.
The independent energy producer said it added 359 million barrels of oil equivalent of proved reserves in 2010, which equates to replacing 153% of production.
On Monday, Anadarko reported a fourth-quarter profit of $111 million, or 22 cents a share, compared with a year-earlier profit of $229 million, or 46 cents a share. Excluding derivatives and other impacts, per-share earnings grew to 29 cents from 4 cents. Revenue jumped 11% to $2.69 billion.
Analysts expected a profit of 21 cents a share on revenue of $2.75 billion.
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