Anadarko Tags Up to $5.6B for 2010 Capex
Anadarko announced its 2010 capital program, 2010 guidance and the highlights of today's Anadarko Investor Conference.
"We announced very strong results in 2009 including record production, nine deepwater discoveries and significant cost reductions, and ended the year with a strong balance sheet -- all of which support our higher expectations for 2010 and future years," said Jim Hackett, Anadarko Chairman and CEO. "The capital-efficient qualities and predictable performance of our base assets provide a solid foundation for our anticipated growth. Building upon our base with the expected growth from our natural gas shale plays and oil-focused mega projects, we project that we can surpass 3 billion BOE (barrels of oil equivalent) of proved reserves by year-end 2014, with an increased production CAGR (compounded annual growth rate) of 7 to 9 percent over the five-year period. We also remain focused on transitioning our world-class deepwater discoveries into the next generation of mega projects, with a target of six new mega projects on line by 2016."
Total 2010 capital expenditures including expensed geology and geophysics (G&G), as approved by the company's Board of Directors, are expected to be between $5.3 and $5.6 billion.
In 2009, Anadarko allocated approximately $1.8 billion to its base and increased sales volumes by about 7 percent relative to 2008. This year, the company has allocated approximately $2 billion to these near-term projects and expects to increase sales volumes in 2010 by up to 5 percent over the 2009 total of 220 million BOE.
Anadarko has allocated approximately 22 percent of the 2010 capital budget to the ongoing development of its oil-weighted and sanctioned mega projects, which remain on time and on budget. The Jubilee Phase I development, offshore Ghana, is on track for first production in late-2010. Construction of the 120,000-barrel-per-day FPSO (floating production, storage and offloading) vessel is approximately 90-percent complete. The FPSO is scheduled to arrive in Ghana in the second quarter of this year. All 17 of the Jubilee Phase I development wells have been drilled, and the installation of the subsea infrastructure is under way.
At the Caesar/Tonga complex in the deepwater Gulf of Mexico, the partnership has successfully drilled three of the four development wells, and conversion work on the topsides at the Constitution spar is nearly complete. The project remains on schedule to deliver first production during the second quarter of 2011.
Work also continues to progress at the El Merk development in Algeria. The project is approximately 28-percent complete, and 62 of the 140 wells have been drilled. First production is anticipated in late-2011. By 2012, the company expects these three sanctioned mega projects to deliver approximately 60,000 barrels of oil per day, net to Anadarko.
Anadarko currently holds approximately 600,000 net acres in core positions in the Marcellus, Haynesville, Eagleford and Pearsall shale plays onshore in the U.S., with an estimated 50 trillion cubic feet of natural gas equivalent (Tcfe) of gross unrisked resources. For 2010, the company expects to allocate approximately 10 percent of its capital budget to these areas that have the potential to increase their production over a five-year period at a 60-percent CAGR. This capital spend is in addition to the benefits of the recently announced joint-venture agreement in the Marcellus Shale, whereby Mitsui will carry Anadarko’s development costs in 2010.
Approximately 20 percent of the 2010 capital program is allocated to exploration, with much of it focused on the company's worldwide deepwater exploration program that includes plans to drill approximately 30 high-impact exploration/appraisal wells. Up to 13 exploration/appraisal wells are expected to be drilled offshore West Africa, 7 to 10 wells in the Gulf of Mexico, 4 to 6 wells in Brazil, 4 to 6 wells in Mozambique and 3 to 5 wells in southeast Asia.
"Given that at least 75 percent of the $1.1 billion allocated to exploration is directed to the drill bit, we expect to be one of the most active deepwater drillers in the world this year, testing up to 7 billion BOE of gross unrisked resources," said Hackett. "We are targeting approximately 400 million BOE of net discovered resources in 2010, a 12-percent increase over our record 2009 results. At the same time, we are actively appraising several of our recent discoveries -- Wahoo in Brazil, Tweneboa in Ghana, and Lucius, Vito and Heidelberg in the Gulf of Mexico -- as we work to convert these resources to production and value."
Anadarko's total sales volumes for 2010 are projected to be in the range of 226 million to 231 million BOE. For the first quarter of 2010, the company expects sales volumes to be in the range of 56 million to 59 million BOE.
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