Anadarko's K2 Appraisal Well Confirms Significant Discovery

Anadarko Petroleum and its partners have drilled another successful deepwater subsalt appraisal well on their K2 discovery, located in the Gulf of Mexico on Green Canyon Block 562, about 180 miles south of New Orleans.

"We're pleased to discover the potential field size of K2 could be larger than Anadarko's previous estimates," Glomar Celtic Sea said Anadarko Chairman, President and CEO Robert J. Allison, Jr. "The K2 No. 3 appraisal well was intended to confirm the northwestern edge of the field, but the field extends even deeper and farther beyond what we had predicted. In fact, the outermost limits of K2 are still unknown."

Later this summer, Anadarko plans to drill an exploration well on the northern adjacent block, Green Canyon Block 518, in which the company holds a 100 percent working interest.

The K2 No. 3 well was spudded by Agip Petroleum Co. Inc. in February 2003 in about 3,900 feet of water. The well reached a total depth of more than 27,000 feet and encountered a total of 208 feet of oil pay in two sands with no oil-water contact. The well was drilled by GlobalSantaFe's semisub, Glomar Celtic Sea. The findings confirm the prior estimated gross reserves of about 100 million barrels of oil equivalent, and the lack of an oil-water contact suggests additional reserve potential. The well extended the limit of the proven oil column down dip an additional 800 feet on the K2 structure.

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

The K2 partner companies expect to make a decision on development plans as early as this summer. They are considering options including a separate structure or a tie-back to the nearby Marco Polo facility, which will be installed late this year and operated by Anadarko. First production from K2 could be late 2004 or early 2005.

In 1999, a No. 1 well and sidetrack were drilled on the same block, about 4,000 feet away. The wells encountered only one zone with average net pay of 60 feet. In September 2002, the No. 2 well found a total of 339 feet of pay. The No. 2 was also sidetracked up dip to evaluate the extent of the discovery and encountered 84 feet of net pay from three intervals.

Anadarko currently owns an interest in 378 blocks in the Gulf of Mexico, of which 167 are in deepwater.