Mechanical Issues Delay Production at Anadarko's Caesar/Tonga Project

Anadarko announced that a mechanical issue involving the production riser system at the Caesar/Tonga project in the deepwater Gulf of Mexico will delay first production, which was expected in mid-2011. Although the production riser system underwent an extensive qualification program prior to installation, Anadarko's recent hydro-testing of the riser provided results that preclude it from being put into service on this project.

"We are delaying first production at the Caesar/Tonga project after our recent hydro-test of the production riser system indicated it was not fit for service," said Chuck Meloy, Anadarko Sr. Vice President, Worldwide Operations. "The project was otherwise on schedule, as we had recently secured the necessary permits to begin completions on the first two wells; nonetheless, in the interest of safety and the environment, delaying startup is clearly the right decision. We plan to continue the completion activities as we work with the co-owners to secure a reliable alternative for the production riser. Importantly, this should not impact our ability to meet the 2011 sales-volumes estimate that we provided in March of last year, as we continue to expect full-year 2011 volumes to be well within the range of 240 million to 250 million BOE (barrels of oil equivalent). We plan to announce our 2011 guidance and capital program during an extended investor conference call being planned for late February."

Anadarko operates the Caesar/Tonga development with a 33.75-percent working interest. Co-owners in the project include Statoil Gulf of Mexico LLC (23.55-percent working interest), Shell Offshore Inc. (22.45-percent working interest) and Chevron U.S.A. Inc. (20.25-percent working interest). Caesar/Tonga is located in the Green Canyon area of the Gulf of Mexico, in close proximity to Anadarko's Constitution spar in Green Canyon block 680.