Anadarko Ceases Drilling Ops in GOM
Anadarko reaffirmed its full-year 2010 sales-volumes guidance range and projected capital spending. The company also announced interim results of a successful deepwater Gulf of Mexico appraisal well that was suspended in accordance with the recently extended moratorium on Gulf of Mexico drilling activity, as well as actions taken to manage its deepwater drilling rig obligations during the moratorium.
Anadarko's sales-volumes guidance remains 230 million to 234 million barrels of oil equivalent (BOE) for the full year and 57 million to 60 million BOE for the second quarter. Capital spending for the full year, including expensed G&G (geology and geophysics), is still expected to be in the range of $5.3 billion to $5.6 billion.
"We share everyone's desire to ensure the safety of deepwater drilling activity," Anadarko Chairman and CEO Jim Hackett said. "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.
"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. Although our Gulf of Mexico drilling activity has been suspended due to the 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 world-wide exploration, appraisal and development programs."
GULF OF MEXICO UPDATE
The company has ceased all drilling operations in the Gulf in accordance with the U.S. Department of the Interior's announcement last week of an extended industry-wide deepwater drilling moratorium. Prior to the moratorium, the company was conducting the following operated appraisal and completion activities:
- Lucius (Keathley Canyon block 875) - The second of three appraisal wells encountered more than 650 net feet of oil pay to date in three of the primary targets. Drilling was suspended approximately 2,000 feet from TD with one additional target yet to test. Anadarko operates Lucius with a 50-percent working interest. Co-owners in the block include Plains Exploration & Production (33.33-percent working interest) and Mariner Energy, Inc. (16.67-percent working interest).
- Callisto (Mississippi Canyon block 875) - Anadarko successfully completed the Callisto discovery and expects to tie the well back to the Independence Hub natural gas platform. The well is expected to begin production later this year at an anticipated rate of approximately 40 million cubic feet of natural gas per day. Anadarko operates Callisto with a 100-percent working interest.
- Heidelberg (Green Canyon block 903) - Anadarko had planned to redrill the Heidelberg appraisal well; however, because the well had not spud prior to the initial moratorium, Anadarko moved the rig to Red Hawk to conduct P&A (plugging and abandoning) activities.
The company's management has already taken a number of actions to protect the interest of its shareholders during the moratorium. Notification of Force Majeure has been provided to drilling contractors of three of the company's contracted rigs in the Gulf of Mexico. The company has one remaining rig under contract in the Gulf. Based upon directives from the Minerals Management Service, Anadarko plans to utilize this rig to continue its completion, workover and other non-drilling activities on existing wells during the moratorium.
"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. Furthermore, as a non-operating 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," added Hackett.
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