Anadarko Tags Nearly $6B for 2011 Capex
Anadarko announced its 2011 capital program and guidance, and provided additional information on several operating areas.
"We've designed a portfolio that has produced record results in recent years, and generated significant momentum for continued performance in 2011 and well into the future," said Jim Hackett, Anadarko Chairman and CEO. "In 2011, we expect to increase sales volumes to a range of 244 to 248 million BOE (barrels of oil equivalent), including a projected increase of about 10 percent in liquids volumes that deliver higher margins. Our 2011 capital spending is projected to be well within anticipated cash flows, based on today's strip prices, and will enable us to accelerate our proved reserve additions with a reserve-replacement ratio of more than 150 percent. Achieving these objectives will keep us on course to meet the five-year targets we established in March 2010, which include surpassing 3 billion BOE of proved reserves by year-end 2014, and increasing sales volumes at a 7- to 9-percent five-year CAGR (compounded annual growth rate)."
Total 2011 capital expenditures are expected to be between $5.6 and $6.0 billion. This amount does not include expenditures by Western Gas Partners, LP (WES), a separate publicly traded entity controlled by Anadarko and consolidated in its financial statements. An approximate breakout of the 2011 capital program, by area and by type, is included below:
|By Area||By Type|
|U.S. Onshore||55%||Near-Term Base||40%|
|Gulf of Mexico||10%||Mega Projects||15%|
Shales and Emerging U.S. Onshore Growth Plays
During 2010, Anadarko significantly increased drilling activity, expanded infrastructure and secured the necessary service agreements to facilitate rapid growth in the Eagleford and Marcellus shale plays. The company plans to allocate approximately 10 percent of its 2011 capital program toward these areas. This level of spending reflects the net benefit of our existing joint-venture agreement in the Marcellus and also assumes the near-term completion of a similar agreement in the Eagleford. During 2011, Anadarko plans to continue accelerating growth in the shale plays and, by the end of the year, expects shale production to account for approximately 10 percent of the company's total daily sales volumes.
In the liquids-rich Eagleford Shale, Anadarko has increased the average estimated ultimate recoveries (EURs) of its existing wells to more than 450,000 BOE per well. Already among the largest producers in the Eagleford, Anadarko plans to accelerate the realization of value from these resources by doubling its 2010 drilling activity to more than 200 wells planned in 2011.
Anadarko also continues to enhance well performance in the Marcellus Shale, where EURs are trending toward the higher end of the company's previous estimates of 4 to 6 billion cubic feet (Bcf) per well. Anadarko expects to operate 10 rigs in 2011 in the Marcellus and to participate in more than 250 wells during the year. The Marcellus will continue to be the only domestic dry natural gas field where the company will be actively drilling, due to the play's proximity to premium natural gas markets that enhance the already robust economics.
Anadarko also will continue to invest capital in several other emerging U.S. onshore oil plays. These include the Bone Spring, Avalon Shale and Wolfcamp plays in the Permian Basin of West Texas, and the horizontal Niobrara play, primarily within the company's Land Grant acreage in northeastern Colorado and southeastern Wyoming.
Anadarko has allocated approximately 15 percent of its 2011 capital budget to the ongoing development of its sanctioned mega projects. Production at the Jubilee field offshore Ghana will continue to increase toward capacity of 120,000 gross barrels of oil per day during the year. Currently, the field is producing approximately 50,000 gross barrels of oil per day from four wells. Development activities are ongoing at the company's two other sanctioned mega projects at Caesar/Tonga in the Gulf of Mexico and El Merk in Algeria, both of which are expected to achieve first oil in 2012.
Consistent with previous years, approximately 25 percent of the 2011 capital program is allocated to exploration. Approximately $1 billion is expected to be invested in drilling activities, with a focus on the company's worldwide offshore and deepwater programs, which include approximately 25 exploration and/or appraisal wells this year. Africa will continue to be a primary focus area with 12 to 15 wells planned in West Africa, and another three to five wells planned in the Rovuma Basin offshore Mozambique.
"With 19 offshore discoveries in the last three years, and two already in 2011, our exploration program is a differentiating value enhancer for our shareholders," added Hackett. "We continue to be among the most active and successful deepwater explorers in the world, and together with our U.S. onshore exploration activities, we expect to discover and de-risk approximately 500 million BOE of net resources as a result of our 2011 exploration program. In addition to finding new resources, we plan to continue advancing existing discoveries to development with very active appraisal programs in Mozambique, Ghana, Brazil, Sierra Leone and the Gulf of Mexico."
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