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Anadarko sells interests in discoveries Gulf deepwater Knotty Head, Big Foot, one prospect, go to Statoil; Canadian Arctic properties swapped for stake in Tonga discovery Ray Tyson For Petroleum News
Anadarko Petroleum, in a continuing effort to pay down a colossal $24.3 billion acquisition debt stemming from the takeover of fellow E&P independents Kerr-McGee and Western Gas Resources, has agreed to sell its interests in two promising discoveries and one prospect in the deepwater Gulf of Mexico to Norway’s Statoil for $901 million.
Anadarko said it also cut a separate deal with Chevron to swap its remaining “arctic frontier” assets in Canada for an additional 12.5 percent working interest in seven Chevron blocks in the Gulf of Mexico encompassing the deepwater Tonga discovery, as well as undisclosed “enhanced terms” related to the companies’ recently announced West Texas exploration joint venture.
Meanwhile, the big Houston-based independent said it completed the previously announced $4 billion sale of Anadarko Canada to Canadian Natural Resources.
“The sale of Anadarko Canada has allowed us to reduce debt. … While the Chevron transaction has provided valuable new interests within our core onshore and deepwater Gulf of Mexico focus areas,” Jim Hackett, Anadarko’s chairman, president and chief executive officer, said Nov. 2.
However, Anadarko’s decision to sell its 25 percent interest in Knotty Head, 15 percent stake in Big Foot and 15 percent stake in the Big Foot North prospect appear to be out-of-step for an obviously aggressive company that recently became the leading independent producer in deepwater Gulf of Mexico, via its $18 billion acquisition of Oklahoma-based Kerr-McGee.
Kerr-McGee, already a premier deepwater explorer and producer when Anadarko acquired the company, also is largely responsible for the so-called “hub-and-spoke” approach to field development in the U.S. Gulf, where production from smaller satellite fields is transported to a central production facility anchored by a large discovery, thereby improving overall project economics.
Owns interests in nine hub-and-spoke developments Anadarko now owns interests in nine hub-and-spoke development projects already on line, several discoveries proceeding toward sanction, six exploration wells currently drilling, and an envious prospect inventory bolstered by the Kerr-McGee acquisition.
“The agreement with Statoil represents an opportunity to realize the value from a portion of our extensive portfolio,” Anadarko’s Hackett explained. Still, the Nexen-operated Knotty Head oil discovery on Green Canyon Block 512 is definitely a prize worth keeping.
For one, Knotty Head is in the heart of a prolific geological trend in southeastern Green Canyon that produced such gems as Tahiti, Mad Dog, Atlantis and Holstein. And Knotty Head’s 600 feet of net pay potentially ranks it among the larger discoveries in the U.S. Gulf, with preliminary reserve estimates ranging from 200 million to 500 million barrels of oil equivalent, truly an elephant by Gulf standards, if appraisal drilling proves up the higher end of current reserve estimates. Nexen and partner Anadarko have hyped Knotty Head as a potentially “world-class” discovery.
Moreover, some geologists now believe that Knotty Head and the nearby Hess-operated Pony discovery make up one huge accumulation. Interestingly, Anadarko supports this view. “We anticipate that it will be all part of the same reservoir,” Bob Daniels, Anadarko’s senior vice president of exploration and production, said in a July conference call with analysts.
Big Foot continues to evolve Chevron’s Big Foot discovery continues to evolve into a first-rate deepwater Gulf oil play. An appraisal well confirmed the same approximately 300 feet of net pay initially found in the discovery well on Walker Ridge Block 29. “Big Foot is potentially a very, very large discovery,” Chris Oynes, Gulf regional director for the U.S. Minerals Management Service, said in early May at the Offshore Technology Conference in Houston.
In September this year, Statoil acquired working interests in Big Foot, Big Foot North and Caesar from Plains Exploration & Production. If its deal with Anadarko closes, Statoil would end up with 25 percent of Knotty Head, 27.5 percent of Big Foot and 27.5 percent of the Big Foot North prospect.
Knotty Head also is close to the Chevron-operated Tahiti and Tonga discoveries, where Statoil holds a 25 percent working interest in both fields. It is also close to the Shell-operated Caesar discovery, in which Statoil holds a 17.5 percent working interest.
Located in the same geological trend as Tahiti and Caesar, Big Foot also lies in the Walker Ridge area near the Jack and St. Malo Lower Tertiary discoveries operated by Chevron. Statoil happens to hold a 25 percent working interest in Jack and a 6.25 percent working interest in St Malo.
Statoil now well positioned Statoil said it is now well positioned in key deepwater areas of the U.S. Gulf, with working interests in 11 discoveries, including the current development of the giant Tahiti field.
“With this acquisition, we’ll add an interesting new discovery (Knotty Head) to our portfolio and will gain a solid foothold in Big Foot and Big Foot North,” said Oivind Reinertsen, Statoil’s senior vice president of Gulf of Mexico activities.
However, Anadarko said the transaction with Statoil, expected to close in the first quarter of 2007, is subject to “applicable pre-emption rights of co-owners,” suggesting that Anadarko’s current partners in Knotty Head and Big Foot could trump the deal with a better offer. In lieu of a sale, “the parties are discussing the possibility of a joint venture arrangement to effect the transaction,” Anadarko said.
Regarding the property swap, Chevron would receive Anadarko’s remaining Arctic frontier interests in the Mackenzie Delta, Canadian Beaufort Sea and Yukon.
In the Mackenzie Delta region alone, Anadarko holds 400,000 net acres in an area where 9 trillion cubic feet of natural gas already has been discovered by others and up to 60 tcf remains to be discovered, according to National Energy Board.
The most significant of Anadarko’s acreage is said to be in northern Canada consisting of two onshore blocks adjacent to the natural gas-rich Parson’s Lake field. In addition, the company holds an exploration license situated northwest of the giant Taglu field.
In return, Anadarko’s working interest in the Gulf’s Tonga discovery would increase to 37.5 percent. Anadarko said it intends to accelerate development of the field, potentially as a tie-back to the company’s 100 percent owned Constitution production facility.
In closing its $4 billion acquisition of Anadarko Canada, Canadian Natural Resources gains roughly 358 million cubic feet per day of natural gas production and 9,300 barrels per day of oil and natural gas liquids production. Assets also include about 1.5 million net undeveloped acres and key strategic facilities in the high growth areas of northeast British Columbia and northwest Alberta.
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