Anadarko Makes Deepwater Gulf of Mexico Discovery

Anadarko Petroleum has made a Gulf of Mexico deepwater subsalt discovery appraisal well at K2 on Green Canyon Block 562, about 180 miles south of New Orleans. The K2 No. 2 well was spudded by Agip Petroleum Company in April 2002 in about 3,900 feet of water. It encountered a total of 339 feet of oil pay in three sands in an untested fault block and reached target depth of 25,700 feet. The well results from this discovery extend the limit of proven oil both laterally and downdip on the K2 structure. The partner companies are planning additional appraisal drilling on the K2 field for 2003. They are evaluating development plans for K2 and considering options - including a separate structure or a tie-back to the Marco Polo hub. Initial results from the well indicate that commercial development is likely with first production as early as 2004. Previously, in May 1999, a No. 1 well and sidetrack had been drilled on the same block, about 4,000 feet away. The well encountered only one zone with about 60 feet of net pay. The latest discovery, the No. 2 well, has found 134 feet in the same interval, plus two new zones, which total 339 feet of pay.

"Anadarko's strategy to chase the subsalt play in deepwater was the right move for stockholders," said John Seitz, Anadarko president and chief executive officer. "Our first deepwater discovery at Marco Polo is being developed, and we have several other deepwater prospects that will be drilled as we evaluate our deepwater subsalt exploration inventory."

The K2 discovery is within 6 miles of the Marco Polo field - a discovery located at Green Canyon Block 608, which was announced by Anadarko in 2000.

Anadarko holds a 52.5 percent working interest in the project; other partners include AGIP (operator - 18.2 percent), Conoco (16.8 percent) and Unocal (12.5 percent).

The Marco Polo platform is under construction and scheduled to be installed in the third quarter of 2003, with first production targeted for the first quarter of 2004. Four development wells have been drilled in 2002 with better-than-anticipated results.

When completed, Marco Polo will be the deepest tension-leg platform in the world. Through a project agreement, El Paso Energy Partners and Cal Dive International will construct and own the platform structure, and Anadarko will be the operator. Production capacity will be 100,000 barrels of oil per day (Bbl/d) and 250 million cubic feet of gas per day (MMcf/d). Under the agreement, Anadarko will have firm capacity of 50,000 Bbl/d and 150 MMcf/d. The remainder of the platform capacity will be available to Anadarko for additional production and/or to third parties that have activity in the area.