Everything's Adding Up at Anadarko

by Toby Shute - November 5, 2009 - 0 comments

Elsewhere today, I looked at a new rig productivity index
that attempts to quantify how much more efficient our
domestic onshore exploration and production companies have
become.
Anadarko Petroleum (NYSE: APC) is one of the
prime examples of how these companies are

doing more with less.

<p>Elsewhere today, I looked at a new rig productivity index
that attempts to quantify how much more efficient our
domestic onshore exploration and production companies have
become.
<strong>Anadarko Petroleum</strong> (NYSE: APC) is one of the
prime examples of how these companies are

doing more with less.</p>

This week, Anadarko released its third-quarter results, which saw
volumes hit a record 616,000 barrels of oil equivalent per day. The
company is on target for 7% full-year production growth, while capital
spending is down 35% from 2008. A quiet hurricane season is always
helpful, but operating performance is really the key here.

Anadarko's results in Colorado's Wattenberg field continue to amaze.
In 2007, the firm was running five rigs in the field and drilling
around 60 wells per quarter. This quarter, Anadarko ran just three
rigs, but drilled 70 wells. The production stream there is about 40%
liquids, so this lightning-quick drilling operation is highly economic
today.

That brings up another point. This summer, I wrote about Apache's (NYSE: APA) beautiful balance between oil and natural gas production, contrasting it to the gassy output of Anadarko and EOG Resources (NYSE: EOG).
Anadarko has achieved a very rapid shift in its production mix, moving
from 36% liquids (i.e. oil and natural gas liquids like propane and
isobutane) in the first quarter to 42% liquids this quarter.

Aside from the Wattenberg, Anadarko is turning to other oily onshore
plays such as the Eagle Ford shale, which has also captivated the likes
of Petrohawk Energy (NYSE: HK), Pioneer Natural Resources (NYSE: PXD), and Saint Mary Land & Exploration (NYSE: SM).

Then, of course, there's the offshore, which has drawn a lot of
attention to Anadarko's exploratory expertise this year. This quarter,
the company brought its year-to-date deepwater discovery count to
seven. Vito was drilled with partners Royal Dutch Shell and StatoilHydro (NYSE: STO) in the Gulf of Mexico, while Venus opened a new frontier in the Sierra Leone-Liberian Basin.

With the high-impact exploration program that Anadarko will continue
to execute in the future, I can hardly blame the company for taking a
cautious approach to hedging in 2010. The firm has collared 75% of its
expected natural gas production, and about 70% of its crude oil output.
With regard to natural gas in particular, Anadarko said it sees "a lot
of supply and demand fundamentals that make us want to be hedged in
that commodity." Better safe than sorry in this game.

Companies in this news:

Anadarko Petroleum

EOG Resources

Last edited by Rakhi Kaptiyal on Thu, 11/05/2009 - 10:47 | Write to author: Toby Shute |