anadarko petroleum 1Q08 Operations Report
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  • 1. ANADARKO PETROLEUM CORPORATION 2008 Operations Report First Quarter Investor Relations: John Colglazier Vice President john.colglazier@anadarko.com 832.636.2306 Chris Campbell, CFA Manager chris.campbell@anadarko.com 832.636.8434 Forward Looking Statement . . . 2 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Gulf of Mexico . . . . . . . . . . . . . . . . . . 4-8 Rockies. . . . . . . . . . . . . . . . . . . . . . . . 9-10 Southern . . . . . . . . . . . . . . . . . . . . . 11-12 International / Frontier . . . . . . 13-15 NYSE:APC www.anadarko.com
  • 2. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Forward Looking Statement This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this presentation. Anadarko cannot guarantee that it will successfully execute on its drilling and development plans or meet its production guidance. See “Risk Factors” in the company’s 2007 Annual Report on Form 10-K and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements. 2 NYSE:APC www.anadarko.com
  • 3. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Overview – RIG ACTIVITY – 1Q08 Rig Activity Operated Non-Operated Total 24 Rockies 75 51 25 Southern 32 7 49 LOWER 48 107 58 2 Alaska 4 2 – CAPITAL SPENDING – 6 Gulf of Mexico 8 2 57 TOTAL U.S. 119 62 2 INTERNATIONAL 8 6 ! The capital program totaled $1,056 million during the quarter, of 59 TOTAL COMPANY 127 68 which $782 million (74%) was dedicated to ongoing U.S. E&P activity. Full-year capital expenditures are expected to be between $4.9 and $5.1 billion with approximately 20% allocated to – VOLUMES – exploration. ! Production volumes for the 1st Qtr were 53 MMBOE, which Capital Spending exceeded guidance (50-52 MMBOE). 4Q07 1Q08 $ MM $ MM Net Volumes 309 307 Rockies 1Q08 4Q07 158 189 Southern Gas Liquids Gas Liquids 467 496 LOWER 48 MMcf/d MBbl/d MMcf/d MBbl/d 17 31 Alaska 45 970 Rockies 909 41 221 255 Gulf of Mexico 24 564 Southern 589 23 705 782 TOTAL U.S. 69 1,534 LOWER 48 1,498 64 99 102 INTERNATIONAL 20 0 Alaska 0 22 133 135 Midstream 70 604 Gulf of Mexico 522 68 60 37 Capitalized Items / Other 159 2,138 TOTAL U.S. 2,020 154 997 1,056 TOTAL COMPANY 68 0 INTERNATIONAL 0 83 2 -4 Midstream -7 3 0 3 Other 0 0 229 2,137 TOTAL COMPANY 2,013 240 3 NYSE:APC www.anadarko.com
  • 4. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico LOUISIANA TEXAS New Orleans Baldpate Blind Faith Net Volumes 1Q08 4Q07 Nansen MMcf/d MBbls/d MMcf/d MBbls/d 604 522 68 TOTAL 70 Independence Boomvang Hub K2 Complex – PRODUCING PROPERTIES – Gunnison APC acreage Red Hawk K2 Complex Constitution APC facilities Green Canyon 561/562/605/606/518/563/607 (APC 42% WI) Green Canyon 608 (Marco Polo Field - APC 100% WI Suprasalt) Updip of HKO HKO to LKO ! At the K2 complex, we have completed drilling the Green Canyon Upside Undrilled Potential 561 #2 development well. This down-dip appraisal well helped Anadarko WI define the extent of the oil-bearing reservoirs that are present in the Flowlines 2008 Down-Dip Locations unit's six producing wells and also encountered new off-structure, oil-bearing sands. The well is currently being side-tracked to further evaluate the extent of these sands. Marco K2 Unit Polo APC WI: 42% ! We continue to analyze our options for enhanced oil recovery (EOR) and anticipate making a recommendation to partners on the optimum technique for the field by year end. ! Another down-dip well, GC 606 #1, is expected to commence drilling following activities on GC 561 #2. 4 NYSE:APC www.anadarko.com
  • 5. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – PRODUCING PROPERTIES (CONT.) – Independence Hub ! With 15 wells producing, the Anadarko-operated Independence Hub exceeded expectations with gross production averaging 841 MMcf/d (444 MMcf/d net to Anadarko) in the 1st Qtr. Independence ! The Cheyenne #3 well (LL 399 #3, APC 100% WI) was drilled to a Hub total depth of 19,344 feet and completed in the 1st Qtr. The well is being tied back to the Independence Hub facility and is expected to begin producing in the 2nd Qtr. ! Since early April, production on the hub has been shut-in due to a leak San Jacinto in the third-party-owned export pipeline. Estimated repairs are Spiderman scheduled to be completed by mid-May, and we expect to ramp-up production shortly thereafter. Mondo NW Atlas NW Q Boomvang Atlas Merganser East Breaks 643/642/688 (APC 30% WI) Vortex East Breaks 598 (APC 100% WI) Jubilee East Breaks599 (APC 33% WI) Cheyenne st ! The East Breaks 688 #6 ST well was drilled and completed in the 1 Qtr, encountering pay sands in the BS-27 and BS-30 sand intervals. The well is expected to be tied back to the Boomvang spar and begin nd production in the 2 Qtr. 5 NYSE:APC www.anadarko.com
  • 6. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – PRODUCING PROPERTIES (CONT.) – Nansen Gunnison East Breaks 558/602/646/689/690 (APC 50% WI) Garden Banks 667/668/669 (APC 50% WI) ! During the 1st Qtr, Anadarko drilled and began completion operations ! Four satellite wells at Northwest Nansen were hooked up to the Nansen spar in the 4th Qtr of 2007 and began production in the 1st Qtr on a new development well, GB 677 #2, in the Gunnison field. The of 2008. well encountered multiple pay horizons, and first production is expected in the 2nd Qtr. ! A two-well recompletion program was initiated and is expected to be nd completed in the 2 Qtr. Conger ! A two-well satellite program to the southeast of the Nansen spar Garden Banks 215 (APC 25% WI) began during the 1st Qtr. Both wells are planned to be tied back to the Nansen spar and begin production in the 1st Qtr of 2009. ! Anadarko will participate in a recompletion operation on the Conger #8 well beginning in the 2nd Qtr. Production is expected during the 3rd Ticonderoga Qtr. Green Canyon 768 (APC 50% WI) Red Hawk ! The connection of the GC 768 #3 and #1 ST 4 wells to the Garden Banks 877 (APC 50% WI) Constitution spar (APC 100% WI) were completed, and the wells were brought on line during the 1st Qtr. ! Recompletion operations on the GB 877 #1 ST 2 well began in the 1st nd Qtr and are expected to conclude in the 2 Qtr. 6 NYSE:APC www.anadarko.com
  • 7. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – MAJOR DEVELOPMENTS – Power Play Blind Faith Garden Banks 258/302 (APC 45% WI) Mississippi Canyon 695/696 (APC 25% WI) ! Platform modifications, flowline fabrication and installation ! The Blind Faith (Chevron-operated) semi-submersible production continue to be on schedule for Anadarko's Power Play discovery. platform sailed from Ingleside, Texas, to its final location on Mississippi Canyon 650 in the 1st Qtr. Mooring, platform and pipeline Power Play will be a subsea tieback to the Baldpate facility and is expected to be on line late in the 2nd Qtr. installation and commissioning continue for an expected start up in the 2nd half of 2008. The facility is currently being upgraded to a Caesar / Tonga Complex capacity rating of 70,000 BOEPD. Green Canyon 683 (APC 20% WI) Green Canyon 726/727/770 (APC 37.5% WI) ! Progress continues on development of the Caesar / Tonga complex. Detailed reservoir simulation and subsea concept-validation work st occurred in the 1 Qtr. In addition, unitization discussions were initiated with agreement that a phased development to the Constitution spar (APC 100% WI) is the preferred option. 7 NYSE:APC www.anadarko.com
  • 8. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – EXPLORATION – ! Anadarko was the apparent high bidder on 20 deepwater tracts in the Central and Eastern Gulf of Mexico Oil and Gas Lease Sales 206 and 224. Bidding alone and with partners, the company was successful on 20 total bids, representing an expenditure of $143 million net to Anadarko. The bids are subject to approval by the U.S. Interior Department's Minerals Management Service. The company's winning bids were primarily focused on high-impact, drillable targets in the Miocene fairway. ! The Green Bay prospect (Walker Ridge 372 #1), which spud in December 2007, reached a total depth of 30,516 feet in March. The LOUISIANA well, which targeted the Lower Tertiary, has been plugged and TEXAS New Orleans abandoned. Anadarko was the operator with a 25% working interest, with partners StatoilHydro (40% WI), Devon Energy (23.4% WI), Blind Faith ConocoPhillips (10% WI) and Nippon Oil Exploration U.S.A. (1.6% WI). Caesar ! Anadarko is currently drilling the Sturgis North #1 (Atwater Valley 138), which spud in early February with a middle Miocene target. The well is drilling in 3,431 feet of water, with a proposed total depth of Sturgis North 31,500 feet. Anadarko and partners Chevron (operator), StatoilHydro and Devon Energy each hold a 25% working interest in the well. West Tonga APC acreage Exploratory Drilling Green Bay Major Developments 8 NYSE:APC www.anadarko.com
  • 9. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Rockies Gross Rig Activity Completed Wells Net Volumes Capital 1Q08 1Q08 1Q08 1Q08 4Q07 Expl. Dev. Oper. Non-Op. $ MM MMcf/d MBbls/d MMcf/d MBbls/d TIGHT GAS Natural Buttes 219 3 182 2 96 8 3 0 89 Wattenberg 165 17 172 16 69 6 1 0 111 Pinedale 69 1 77 1 28 0 23 0 33 Wamsutter 82 8 72 6 14 1 7 0 27 Other 84 5 102 3 18 1 3 0 19 CBM 348 0 300 1 50 7 14 0 239 EOR 3 11 4 12 32 1 0 0 2 970 45 909 41 307 24 51 0 520 TOTAL Tight Gas EOR CBM – TIGHT GAS DEVELOPMENT – Greater Natural Buttes Powder River CBM ! The Greater Natural Buttes area continued to set production records. A new gross single-day operated production record of 280 Pinedale Salt Creek MMcf/d was achieved during the quarter. Wamsutter ! 52 operated wells were spud and 65 operated wells were completed Moxa Monell during the quarter. Monell Atlantic Rim All 16 wells on the 10-acre White River pad have been drilled, with ! completion activities ongoing. This innovative project was awarded Greater Wattenberg the Earth Day Award from the Utah Division of Oil, Gas and Mining Natural Buttes Helper for Environmental and Technical Excellence. ! As a result of 10-acre potential and 20-acre performance, the team increased total resource estimates for the field by 2.3 Tcfe to 9.2 Tcfe. 9 NYSE:APC www.anadarko.com
  • 10. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Rockies Wattenberg ! Activity at the Wattenberg field in Colorado continued at a brisk pace, ! Anadarko and its JV partner Williams drilled a combined 109 wells in the Powder River Basin during the 1st Qtr 2008. The company plans to drilling 74 gross operated wells and performing a record 247 frac jobs for the quarter. The six-rig program is expected to grow to eight by the drill or participate in more than 900 wells (530 operated) during 2008. end of the summer. ! Performance from the Big George Coals continues to exceed Pinedale expectations with indications of shorter dewatering time and earlier first gas in the Anadarko-operated Powder Valley and Williams Draw ! Anadarko (10% WI) participated in drilling 67 non-operated wells units. during the quarter. ! Ongoing field-compression expansion and midstream projects, st including the installation of the Big George Line and County Line ! In the 1 Qtr, Questar received regulatory approval for a 5-acre pilot. amine treatment facilities, are expected to have a positive volume In December 2007, Ultra's 5-acre pilot was also approved. This is impact over the next several months. expected to increase the overall field recovery and add to Anadarko's proved reserve base. ! Anadarko drilled 30 of 160 planned 2008 wells in Atlantic Rim during the 1st Qtr. – COALBED METHANE DEVELOPMENT – ! Production from Anadarko's coalbed methane (CBM) assets – ENHANCED OIL RECOVERY – continued to grow during the quarter. Powder River CBM continued to set production records as total gross sales volumes for Anadarko- ! Total gross CO2 oil production exceeded 10,000 BOPD for a milestone operated and non-operated interests topped 700 MMcf/d during the this quarter, with Salt Creek achieving a new daily production record month of March. of 7,350 BOPD. Additionally, Salt Creek cumulative EOR production surpassed 5 MMBO during the quarter. 10 NYSE:APC www.anadarko.com
  • 11. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Southern Gross Net Volumes Rig Activity Completed Wells Capital 1Q08 1Q08 1Q08 1Q08 4Q07 $ MM Expl. Dev. MMcf/d MBbls/d Oper. Non-Op MMcf/d MBbls/d 101 26 7 3 1 5 Haley 0 104 0 40 3 1 0 0 14 Ozona 1 40 1 59 2 0 0 0 4 Mid-Continent 1 63 0 153 24 2 1 0 8 Bossier 0 158 0 81 50 6 0 0 30 Carthage 5 77 5 38 30 6 2 1 6 Chalk 12 50 13 92 54 3 1 0 14 S. Texas / Other 5 97 4 Tight Gas 564 189 25 7 2 81 TOTAL 24 589 23 Fractured Reservoirs Other Carthage Marcellus Shale ! Carthage continued an active drilling program with six rigs running throughout the quarter. Rig efficiencies are being realized as the Hugoton vertical drilling program saw an average decrease of four drilling days per well within the quarter. The horizontal drilling program continues to provide encouraging results with five wells drilled to date. Haley Carthage Freestone Bossier East Chalk Ozona Maverick ! The Bossier asset has performed well in recent months – achieving its highest gross operated production rate since 2005 at more than 260 MMcf/d. Based on recent success, the two-rig program will ramp South Texas up to three rigs in the 2nd Qtr. 11 NYSE:APC www.anadarko.com
  • 12. First Quarter 2008 ANADARKO PETROLEUM CORPORATION Southern Haley / Delaware Basin Appalachian Basin ! Marcellus shale play leasing continued in the 1st Qtr in ! The Anadarko/Chesapeake partnership had 10 rigs running in the Delaware Basin during the 1st Qtr, with six wells spud and six wells Pennsylvania. Current leasehold in the play is approximately completed. 600,000 gross acres. The company anticipates drilling five to ten wells in the play this year, the first of which is expected to spud during the 2nd Qtr of 2008. – EXPLORATION – Maverick Basin APC Leasing Activity Industry Activity ! In early April, Anadarko entered into a joint exploration agreement with TXCO Resources, Inc. on its 349,000-acre lease in the area. The agreement allows for TXCO to earn up to a 50% working interest Appalachian Basin based on a drill-to-earn arrangement beginning with four wells this year followed by an option extension through 2013. TXCO has farmed-in St. Mary Land and Exploration Company and both intend to drill horizontal wells targeting the Pearsall and Eagleford shale formations in the area. 12 NYSE:APC www.anadarko.com
  • 13. First Quarter 2008 ANADARKO PETROLEUM CORPORATION International / Frontier Net Volumes Capital 1Q08 4Q07 1Q08 $ MM MBbls/d MBbls/d 22 31 Alaska 20 67 14 Algeria 51 – DEVELOPMENT – 16 16 China 17 0 72 Other 0 Alaska China 105 133 TOTAL 88 ! Average gross oil production for the Colville River unit during the 1st ! During the quarter, oil production averaged 46 MBOPD (gross) and the Bohai 8 Rig returned from dry dock to the CFD 11-6/12-1S field to Qtr was approximately 110 MBOPD (gross). During the quarter, continue development drilling. several development wells were drilled in the Fiord area with one rig, which will eventually mobilize to Qannik for additional development Brazil drilling for the remainder of 2008. In addition, construction continues for various modules in connection with the Qannik development at ! During the quarter, Anadarko announced the sale of its 50% interest CD2 with initial production from this reservoir anticipated to begin in the Peregrino field to partner StatoilHydro. The transaction is in late 2008. expected to be completed in the 2nd half of 2008, pending government ! A second rig was brought into the Nanuq area at the end of the 1st Qtr approvals. to drill and complete up to two development wells. ! Anadarko continues to progress field development through the Integrated Project Team with StatoilHydro until the sale is closed. Algeria Ghana ! A milestone event was reached in March of this year with cumulative gross production surpassing 1 billion barrels of oil. ! An integrated development team has been formed with the partners and is working toward 2008 project sanction for the Jubilee field. ! During the quarter, oil production from the Hassi Berkine South and the Ourhoud Central Processing Facilities was 443 MBOPD (gross). ! Inquiries are being made in the FPSO market, with several options Several development wells were drilled during the period. available for first production in 2010. ! The planned maintenance shutdown of Hassi Berkine South, which was deferred from 4th Qtr 2007, began in late March and was completed ! The partnership has contracted for a drilling ship to arrive before the end of 2008 to begin the development drilling program. on schedule in mid-April. The facility is back on line. 13 NYSE:APC www.anadarko.com
  • 14. First Quarter 2008 ANADARKO PETROLEUM CORPORATION International / Frontier – EXPLORATION – Alaska ! Drilling operations were completed at the Jacobs Ladder prospect on ! Anadarko is mobilizing a drillship with dynamic positioning from the the Eastern North Slope of Alaska. The well was drilled to a total Gulf of Mexico to Brazil to execute its anticipated three-well drilling depth of 14,416 feet. Following logging operations, no commercial program in 2008. hydrocarbons were encountered and the well has been plugged. Anadarko operates with a working interest in the prospect of 50%. Algeria st ! During the quarter, Anadarko began drilling two wells – Gubik-3 and ! During the 1 Qtr, the ZEKE-1 exploration well was drilled in Block Chandler-1 – in the Foothills area of Alaska's North Slope. The 403 c/e (APC 66% WI). The well did not encounter commercial oil Gubik-3 encountered natural gas in two zones. Drilling on the quantities and was plugged and abandoned. An appraisal well of the 2007 ZENN-1 oil discovery is planned to spud in the 3rd Qtr. Chandler-1 well has been suspended for re-entry next season. These two wells are the first in a two to three year drilling program to determine the prospectivity and potential commerciality of the area. Anadarko is the operator with a 33.34% working interest in approximately 1 million acres in the Foothills Partnership lands. Brazil ! The Serpa subsalt prospect in Block 24 of the Espírito Santo Basin was slated to reach a total depth of 19,500 feet. Total depth has not been reached and the partnership is evaluating the potential to utilize a different rig to complete drilling operations on the well. While the primary objective has yet to be reached, the partners were encouraged by evidence of an active petroleum system in the subsalt section encountered in the well. Anadarko has a 30% working interest with partners Petrobras (operator, 40% WI) and EnCanBrazil Ltda (30% WI). 14 NYSE:APC www.anadarko.com
  • 15. International / Frontier – EXPLORATION (CONT.) – China ! During the 1st Qtr, Anadarko conducted G&G studies and interpreted ! Following completion of the Odum #1 well, the rig moved to the Mahogany #2 appraisal well. The well, located in 3,540 feet of water recently acquired 2D seismic data on deepwater Block 43/11 in the on the West Cape Three Points Block offshore Ghana, encountered South China Sea. 2D seismic acquisition has resumed and is expected to be completed by the end of the 2nd Qtr. Preparations are under way high-quality stacked reservoir sandstones with approximately 165 to drill a planned 4,000-meter exploratory test during the 2nd half of feet of net oil-bearing pay. Moreover, the Mahogany-2 well is located approximately seven miles to the northeast and up-dip from the 2008. successful Hyedua-1 well on the Deepwater Tano license, indicating a gross oil column of nearly 1,955 feet. We now plan to perform a Ghana drillstem test on the Mahogany-2 well to gain a better understanding of the fluid and flow characteristics, which we anticipate will lead us to ! In the first quarter, our partnership announced a discovery at the update our estimated resource range of the area. Odum #1 well offshore Ghana in the West Cape Three Points block. The well is located in 3,151 feet of water and approximately eight miles from the Mahogany #1 discovery well. The Odum #1 well confirmed a separate and potentially significant oil accumulation in the area. We plan to shoot additional 3-D seismic to provide clearer view of the size and expected impact of this project. APC Acreage Discoveries Successful Appraisal Drilling Jubilee Field Prospect 15 NYSE:APC www.anadarko.com