"This transaction will be accretive to Anadarko's earnings and cash flow from day one," said John Seitz, Anadarko president and CEO. The acquisition of Howell gives Anadarko additional proved reserves of approximately 50 million barrels of oil equivalent (BOE), principally in the Salt Creek and Elk Basin oilfields in Wyoming.
Anadarko plans to invest an additional $200 million over the next four years in the development and installation of an enhanced oil recovery (EOR) project in the Salt Creek field. This is expected to yield an additional 150 million BOE of proved reserves and increase net production from 5,300 BOE per day to 35,000 BOE per day by the end of 2006.
"Howell's assets in Wyoming are a great complement to our own portfolio in the Western States, and our experience with EOR projects in the Mid-Continent, the Permian Basin, Alaska and Algeria gives us a head start in exploiting the oil resources in the Salt Creek field," Seitz said.
The majority of Howell's 120 employees have been offered jobs with Anadarko, including all of the field personnel in Wyoming.
In October, Anadarko closed on a separate agreement with an affiliate of Petro Source Investments Inc., of Houston giving Anadarko the right to purchase significant quantities of carbon dioxide (CO2) and the exclusive rights to market and transport LaBarge CO2 production into the Powder River Basin of Wyoming. Anadarko plans to build a $27 million, 125-mile pipeline that would deliver CO2 to the EOR project in the Salt Creek field and potentially would serve other enhanced recovery projects in Wyoming as well. Anadarko paid $3 million cash and agreed to certain future consideration based on the performance of the pipeline.
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