Anadarko announces multi-billion-dollar capital program

HOUSTON -- Anadarko Petroleum Corporation recently announced its 2017 initial capital program of $4.5 to $4.7 billion along with its 2017 initial capital expectations and guidance.

"In 2017, we plan to allocate approximately 80% of our total capital program toward our U.S. onshore upstream and midstream activities, and our expanded position in the deepwater Gulf of Mexico," said Al Walker, Anadarko Chairman, President and CEO. "These investments provide the foundation for our increased five-year oil growth expectations of more than 15% on a compounded annual basis at current prices, and we are prepared to be flexible throughout the year if we see the opportunity in the Delaware and DJ basins to accelerate activity to capture additional value. Furthermore, sustained oil production from our deepwater Gulf of Mexico, Algeria and Ghana assets is expected to generate significant free cash flow to support growth and fund future value creation through exploration success and our LNG business."

U.S. onshore

During 2016, Anadarko high-graded its U.S. onshore portfolio by divesting a number of natural-gas-weighted assets and concentrating its top-tier positions in the Delaware and DJ basins, which resulted in an expected 25% increase in liquids composition from the U.S. onshore relative to 2015 on a same-store-sales basis.

In the Delaware Basin in West Texas, Anadarko increased its estimated net resources in the Wolfcamp A formation by about 50% to more than 3 Bboe of net resources. In addition, the company estimates it has more than 1 Bboe of incremental potential upside on its acreage in the Wolfcamp B, C and D formations, the Bone Spring, and Avalon Shale opportunities. In 2017, the company plans to invest approximately $820 million in Delaware Basin upstream activities, with an additional $560 million of Anadarko capital allocated toward the expansion of its midstream backbone to enable future growth. Anadarko plans to average 10 to 14 operated drilling rigs during the year and drill more than 150 operated mid-lateral-equivalent wells.

In the DJ Basin of northeast Colorado, Anadarko increased its estimated net resources by about 33% as a result of improved recoveries and additional down-spacing opportunities. The company now estimates it has more than 2 Bboe of net resources within its development area, with additional upside on its acreage in the greater DJ Basin. In 2017, Anadarko plans to invest approximately $840 million in DJ Basin upstream activities, average five to six operated rigs and drill approximately 290 mid-lateral-equivalent wells.

"We expect our current 2017 U.S. onshore capital allocation to deliver significant oil growth toward the end of the year as we overcome the effects of last year's reduced activity levels on our shorter-cycle onshore opportunities," added Walker. "We anticipate achieving an exit rate of approximately 50,000 boped in the Delaware Basin, which is more than 80% higher than 2016, and in the DJ Basin, we expect our oil-production exit rate to be about 100,000 bpd, a 30% increase over the prior year."

Deepwater, international operations

In 2017, Anadarko expects to invest approximately $1.1 billion in its deepwater Gulf of Mexico, Algeria and Ghana assets.

In the Gulf of Mexico, the company plans to continue leveraging its premier infrastructure position and drill approximately seven development tiebacks during the year. In addition, Anadarko expects to benefit from a full year of production from the recently acquired Freeport-McMoRan properties, which doubled Anadarko's sales volumes to more than 160,000 boed at the end of last year. Minimal capital investments are expected to be required in 2017 to maintain the steady, long-lived, high-margin oil production provided by the company's strong cash-generating assets in Algeria and offshore Ghana.

Deepwater, international exploration, LNG

Exploration and LNG development continue to be differentiating components of Anadarko's business. In 2017, the company expects to invest approximately $770 million in its deepwater and international exploration program and LNG project in Mozambique.

During the year, Anadarko plans to drill up to 10 exploration/appraisal wells in the deepwater Gulf of Mexico, Côte d'Ivoire, and Colombia, where Anadarko recently added to its previous exploration success with another discovery at the Purple Angel prospect.

The company expects to continue advancing the Mozambique LNG project where it has made good progress on the legal and contractual framework, and recently submitted a Development Plan to the Government of Mozambique for the Golfinho/Atum discoveries.