Anadarko to spend up to $2.9B on projects

Company plans about 80 percent of exploration and development budget for development; expects to operate 70 rigs in North America

Ray Tyson

Petroleum News Houston Correspondent

Anadarko Petroleum plans to spend between $2.6 billion and $2.9 billion on capital projects in 2004 compared to just under $2.8 billion last year. The company said it provided a spending range in order to pursue “a wide range of opportunities” based on actual cash flow.

“We have a deep portfolio of projects in the event projected cash flows remain strong,” James Hackett, Anadarko’s chief executive officer, said Feb. 6.

Anadarko has allocated $2.3 billion to $2.6 billion for worldwide exploration and development, about 80 percent of which is designated for development and about 20 percent for exploration. The company said it plans to operate an average of 70 drilling rigs in North America during 2004, compared to 57 last year.

“We’re directing capital to the areas that have shown the best performance and rate of return — primarily the Lower 48 onshore,” Hackett said.

Anadarko’s overall spending plan includes about $300 million for capitalized interest and overhead, the company said.

Based on its capital program, the company projects 2004 production volumes of 193 million to 199 million barrels of oil equivalent, representing a 1 to 4 percent increase over 2003 volumes of 192 million barrels of equivalent.

Anadarko said it expects to spend about half its exploration and development budget in the Lower 48 onshore and to drill nearly 900 wells in North Louisiana, Texas and Wyoming.

In Canada, the company plans to drill 175 development and 40 exploration wells this year, with a spending plan that ranges from $375 million to $425 million. The company expects to operate about 10 drilling rigs.

In Algeria, less than $70 million is earmarked for exploration and development, roughly flat with 2003 spending.

In the Gulf of Mexico, Anadarko plans to spend about $600 million. As many as six deepwater wells are planned in the K2 and K2 North areas where first production is expected in 2005. The company also plans to begin installing sub-sea tie backs from these fields to the recently installed Marco Polo platform, which is expected to come online in mid-2004 after delays. In the subsalt, the company expects to complete platform construction for its Tarantula discovery.

In addition, nearly 20 conventional development wells are planned on the Gulf’s outer continental shelf.

On the exploration front, Anadarko said it plans to drill about seven wells in the Gulf of Mexico, of which five are on deepwater acreage.

In Alaska, the company expects to participate in a three to four well program at Moose’s Tooth in the National Petroleum Reserve-Alaska, west of the producing Alpine field. Additionally, the company intends to participate in the acquisition of 3-D seismic data to further evaluate Alpine satellite opportunities.