HOUSTON (Dow Jones Newswires), Aug. 4, 2010
Anadarko said Wednesday it is planning to announce a joint venture in the Eagle Ford Shale in south Texas by year-end and that first production of its three mega-projects in Ghana, the Gulf of Mexico and Algeria is on schedule.
The joint venture will be similar to the $1.4 billion agreement the company completed in the first quarter with Japan's Mitsui in the Marcellus Shale in Pennsylvania, the company said.
"We think it's a really bright business decision," said Anadarko's Chief Financial Officer Robert Gwin, who was speaking to analysts in a conference call.
The idea behind the Eagle Ford joint venture is to use additional capital brought by a partner to drill a significant greater number of wells in a shorter period of time, Gwin said.
In recent years, North American independent gas producers have learned how to crack the tight rock formations known as shale using streams of water and chemicals. The development fueled an unprecedented boom in U.S. gas production, and lured international companies such as Mitsui, India's Reliance Industries, Total and Statoil. Investment from these companies helps independents like Anadarko keep drilling despite restricted cashflow from low natural-gas prices.
Anadarko, which didn't disclose the name of its join-venture partner, said it has redirected capital toward the Eagle Ford shale and other onshore U.S. areas that was initially expected to be invested in the Gulf of Mexico.
Anadarko said its second-quarter results, which were reported Tuesday afternoon and beat analysts expectations, were helped by improved operational performance in areas such as the Eagle Ford. The results demonstrated the drilling moratorium imposed by the federal government in the Gulf of Mexico after a massive oil spill hasn't impacted its production or near-term output guidance.
Anadarko's quarterly production exceeded guidance and the company increased its 2010 production growth guidance to a range of 5% to 7% above last-year levels. The improved production outlook and the company's better-than-expected second-quarter results boosted its shares, which were trading recently Wednesday up 3.8% to $55.17.
Anadarko's adjusted second-quarter earnings of $0.49 per share were above analysts' expectations of $0.35.
Anadarko also said its three mega projects continue to progress on schedule, with its giant Jubilee oilfield in Ghana expected to start production by year end.
In Algeria, the El Merck project is about 50% completed and first production is scheduled around the end of 2011, while the Caesar-Tonga project in the Gulf of Mexico is expected to achieve first production by the middle of 2011.
"We're hopeful to receive the necessary permits to perform completions on our three wells later this year," Chief Executive Jim Hackett said.
Houston-based Anadarko expects these three projects to add in total about 60,000 barrels of oil equivalent per day by 2012.
Copyright (c) 2010 Dow Jones & Company, Inc.
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