anadarko petroleum 2Q08 Operations Report


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anadarko petroleum 2Q08 Operations Report

  1. 1. ANADARKO PETROLEUM CORPORATION 2008 Operations Report Second Quarter Investor Relations: John Colglazier Vice President 832.636.2306 Chris Campbell, CFA Manager 832.636.8434 Danny Hart Manager 832.636.1355 Forward Looking Statement . . . 2 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Rockies . . . . . . . . . . . . . . . . . . . . . . . . . 4-5 Southern. . . . . . . . . . . . . . . . . . . . . . . . 6-7 Gulf of Mexico. . . . . . . . . . . . . . . . . 8-12 International / Frontier . . . . . . 13-15 NYSE:APC
  2. 2. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Forward Looking Statement Cautionary Note to U.S. Investors: The United States Securities This report contains forward-looking statements within the and Exchange Commission (“SEC”) permits oil and gas meaning of Section 27A of the Securities Act of 1933 and Section companies, in their filings with the SEC, to disclose only proved 21E of the Securities Exchange Act of 1934. Anadarko believes reserves that a company has demonstrated by actual production or that its expectations are based on reasonable assumptions. No conclusive formation tests to be economically and legally assurance, however, can be given that such expectations will prove producible under existing economic and operating conditions. to have been correct. A number of factors could cause actual results Anadarko uses certain terms in this operations report, such as to differ materially from the projections, anticipated results or “estimated recoverable resources”, and similar terms that the other expectations expressed in this operations report. Anadarko SEC’s guidelines strictly prohibit Anadarko from including in cannot guarantee that it will successfully execute on its filings with the SEC. U.S. Investors are urged to consider closely exploration, drilling and development plans or meet its the disclosure in Anadarko’s Form 10-K for the year ended production guidance. See “Risk Factors” in the company’s 2007 December 31, 2007, File No. 001-08968, available from Anadarko Annual Report on Form 10-K and other public filings and press at or by writing Anadarko at: Anadarko releases. Anadarko undertakes no obligation to publicly update or Petroleum Corporation, 1201 Lake Robbins Drive, The revise any forward-looking statements. Woodlands, Texas 77380 Attn: Investor Relations. You can also obtain this form from the SEC by calling 1-800-SEC-0330. 2 NYSE:APC
  3. 3. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Overview – RIG ACTIVITY – 2Q08 Rig Activity Operated Non-Operated Total 22 Rockies 74 52 25 Southern 33 8 47 LOWER 48 107 60 1 Alaska 2 1 5 Gulf of Mexico 9 4 – CAPITAL SPENDING – 53 TOTAL U.S. 118 65 3 INTERNATIONAL 8 5 ! The capital program totaled $1,232 million during the quarter, of 56 TOTAL COMPANY 126 70 which $928 million (75%) was dedicated to ongoing U.S. E&P activity. Full-year capital expenditures are expected to be between $4,550 and $4,750 million (excluding expensed exploration) with – VOLUMES – approximately 20% allocated to exploration. ! Sales volumes for the 2nd Qtr were 50 MMBOE, which was within Capital Spending* guidance (50-52 MMBOE), despite more than eight weeks of shut- 1Q08 2Q08 in production at Independence Hub. $ MM $ MM 308 338 Rockies Net Volumes (MMBOE)* 189 272 Southern 2Q08 497 609 LOWER 48 % Change 31 30 Alaska 2Q08 1Q08 2Q07** vs. 1Q08 vs. 2Q07 255 289 Gulf of Mexico 19 19 16 5% 20% Rockies 784 928 TOTAL U.S. 11 11 12 1% -7% Southern 102 100 INTERNATIONAL 30 29 28 4% 8% LOWER 48 133 133 Midstream 2 2 2 4% -17% Alaska 38 71 Capitalized Items / Other 11 15 10 -30% 12% Gulf of Mexico 1,056 1,232 TOTAL COMPANY 43 46 40 -7% 8% TOTAL U.S. 7 6 7 8% -4% INTERNATIONAL 50 53 47 -5% 6% TOTAL COMPANY *Data may not add to totals due to rounding. * Data may not add to totals due to rounding. ** 2Q07 volumes exclude divested volumes. 3 NYSE:APC
  4. 4. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Rockies Gross Rig Activity Completed Wells Net Volumes* Capital* 2Q08 2Q08 2Q08 2Q08 1Q08 Expl. Dev. Oper. Non-Op. $ MM MMcf/d MBbls/d MMcf/d MBbls/d TIGHT GAS Natural Buttes 240 4 219 3 101 8 3 0 67 Wattenberg 174 19 165 17 84 7 1 0 120 Pinedale 73 1 69 1 39 0 26 0 54 Wamsutter 70 7 83 8 24 1 9 0 10 Other 68 4 84 5 17 1 6 0 40 CBM 379 0 348 -1 37 4 7 0 11 EOR 4 12 3 11 36 1 0 0 10 1,008 46 970 45 338 22 52 0 312 TOTAL Tight Gas EOR CBM *Data may not add to totals due to rounding. Powder River CBM – TIGHT GAS DEVELOPMENT – WYOMING Greater Natural Buttes Pinedale Salt Creek ! Natural Buttes achieved another great quarter – growing volumes st th Wamsutter 10% from 1 Qtr and 35% from 4 Qtr 2007, with a new single-day, Moxa Monell gross-operated production record of 304 MMcf/d. Monell Atlantic Rim ! The Chipeta plant is now running at full capacity, processing 270 MMcf/d and increasing NGL production to 3,000 Bbl/d. Greater Wattenberg Natural Buttes Helper ! More than 50 wells were completed in the 2nd Qtr, including 16 wells on a two-tier, 10-acre pad above the White River – a unique operation that earned Anadarko the Earth Day Award from the Utah Division of Oil, Gas and Mining. UTAH COLORADO 4 NYSE:APC
  5. 5. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Rockies Wattenberg ! In the 2nd Qtr, Anadarko drilled a company-record 83 wells and ! At Monell, we recently completed a 10-well pilot drilling program to evaluate the results of greater well density in existing CO2 flood performed 227 fracs. Two additional rigs were mobilized in June. The ramp-up program is on pace to drill more than 350 wells this year – a patterns. 50% increase from 2007. – GREATER GREEN RIVER BASIN – – COALBED METHANE DEVELOPMENT – Moxa ! Operated Powder River CBM assets achieved a single-day, gross- nd record sales level of 408 MMcf/d in the 2 Qtr. The County Line field ! In the Moxa area, Anadarko has one operated rig and four non- operated rigs. Through the end of the 2nd Qtr, the company spud 11 also set a gross-operated sales record of 200 MMcf/d during the quarter. Total gross production for the asset (operated plus non- operated wells and 27 non-operated wells, and completed a total of 26 operated) exceeded 800 MMcf/d in late June. wells. ! The midstream expansion continued in the Powder River Basin with Wamsutter the startup of the Big George Line. This major gathering lateral immediately de-bottlenecked 75 MMcf/d of gas and we expect to ! In the Wamsutter area, Anadarko has one operated rig and 10 non- operated rigs. Through the end of the 2nd Qtr, the company spud 12 provide significant system capacity for future Big George development volumes. In addition, Phase III (Segment 1) of the Fort operated wells and 80 non-operated wells and completed a total of 52 Union Gas Gathering System (“FUGGS”) was completed, adding 200 wells. MMcf/d of take-away capacity. Work on FUGGS Phase III Segment 2 was completed in late July, bringing total capacity on Fort Union to Pinedale 1.3 Bcf/d. ! Anadarko continues to participate in an active program with 27 rigs – ENHANCED OIL RECOVERY – currently running in the Pinedale area. Along with our partners, Ultra, Questar and Shell, Anadarko spud 128 wells and completed 88 wells through the end of the 2nd Qtr. ! Salt Creek Phase 5 was commissioned and CO2 injection commenced during the 2nd Qtr. Construction for Phase 6 is ongoing and expected to be complete at year end. 5 NYSE:APC
  6. 6. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Southern Gross Net Volumes* Rig Activity Completed Wells Capital* 2Q08 2Q08 2Q08 2Q08 1Q08 $ MM Expl. Dev. MMcf/d MBbls/d Oper. Non-Op MMcf/d MBbls/d 84 60 6 2 0 8 Haley 0 101 0 41 4 1 0 0 14 Ozona 1 40 1 59 3 0 0 0 0 Mid-Continent 1 59 1 Tight Gas 156 27 2 1 0 4 Bossier 0 153 0 Fractured Reservoirs 82 56 5 0 0 29 Carthage 5 81 5 Marcellus 44 61 7 1 0 6 Chalk 12 39 12 Other Shale 92 62 4 4 0 25 S. Texas / Other 5 91 4 557 272 25 8 0 86 TOTAL 24 563 24 *Data may not add to totals due to rounding. Hugoton East Chalk Haley Carthage Bossier ! On May 31, 2008, East Chalk reached record gas production of 100 East Chalk MMcf/d gross. By the end of the 2nd Qtr, the East Chalk drilling Ozona program had ramped up to seven operated rigs. Maverick Freestone South Texas ! The Bossier asset team continued to execute a successful program, completing three operated wells during the quarter. In early July, an Carthage additional rig began drilling. The three-rig program will continue for the remainder of the year. ! Carthage continued an active drilling program with six rigs running throughout the quarter. Rig efficiencies continue to be realized as Haley / Delaware Basin the vertical rig program saw an average decrease of two drilling days per well within the quarter. The horizontal drilling program ! The Anadarko/Chesapeake partnership had eight rigs running in continues to provide encouraging results with six wells drilled to the Delaware Basin during the 2nd Qtr, with six wells spud and eight date. wells completed. 6 NYSE:APC
  7. 7. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Southern South Texas Marcellus nd st During the 2 Qtr, the South Texas team implemented a successful ! Marcellus shale play leasing continued in the 1 Qtr in ! new dual-completion program. Pennsylvania. Anadarko’s leasehold in the play is approximately 625,000 gross acres. In conjunction with partners, Anadarko – EXPLORATION – anticipates drilling 5 to 10 wells in five pilot areas this year. Two vertical wells (one in Bradford County and one in Clinton County) nd Maverick Basin were spud and cored during the 2 Qtr, and completions are rd anticipated during the 3 Qtr. In July, the second and third vertical ! In early April, Anadarko entered into a joint exploration agreement wells were spud in Bradford County. with TXCO Resources, Inc., on its 349,000-acre lease in the area. Two horizontal wells were spud (one each in the Pearsall and nd Eagleford Shale) in the 2 Qtr. and are expected to be completed in rd the 3 Qtr. Current Drilling Haynesville ! We have more than 70,000 net acres, prospective for the Haynesville shale play. Essentially all of the prospective acreage is held by production underneath our currently producing fields in the Carthage area and Elm Grove. Before the end of this year, we intend to conduct three or four exploratory tests targeting the Haynesville Marcellus Shale shale objective. Gas Fairway 7 NYSE:APC
  8. 8. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico LOUISIANA TEXAS New Orleans Baldpate/Conger Net Volumes Power Play 2Q08 1Q08 Nansen MMcf/d MBbls/d MMcf/d MBbls/d 604 70 TOTAL 301 68 Boomvang Independence Hub Independence Marco Polo Hub Gunnison Red Hawk APC acreage APC facilities – PRODUCING PROPERTIES – San Jacinto Spiderman Independence Hub Mondo NW Atlas NW Q ! In early April, a leak was discovered in the flex joint on Enterprise Atlas Pipeline Partners’ Independence Trail pipeline, which serves as the Merganser export gas line from the Independence Hub facility. The platform Vortex was immediately shut-in, and crews were mobilized to address the leak. After removing and replacing the O-ring in the flex joint, the Jubilee Independence Hub platform resumed production in mid-June and Cheyenne quickly ramped up. ! The Cheyenne #3 well (APC 100% WI), which was drilled and st completed in the 1 Qtr, was tied back to the Independence Hub nd facility and brought on line in the 2 Qtr. 8 NYSE:APC
  9. 9. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – PRODUCING PROPERTIES (CONT.) – Power Play Nansen Garden Banks 258/302 (APC 45% WI) East Breaks 558/602/646/689/690 (APC 50% WI) ! Anadarko’s Power Play discovery was successfully tied back and ! We continued our successful satellite program at Nansen, where we brought on line during the 2nd Qtr. Initial production from the well was encountered pay in two wells, the EB 646 #8 Shackleton (an exploration well) and the EB 646 #7ST (a sidetrack well). approximately 9,000 BOE/d gross. Gunnison Marco Polo Garden Banks 667/668/669 (APC 50% WI) Green Canyon 608 (APC 100% WI) ! We successfully completed the GB 667 #2 well and tied it back to the ! On the Marco Polo platform, the A-7 well was successfully brought on nd line at a rate of 3,300 BOE/d gross and the A-3 well was recompleted Gunnison spar in the 2 Qtr. In addition, new zones in two existing and brought on line at a rate of 3,350 BOE/d gross. wells – the GB 668 #9 and the GB 669 #1 – were brought on line. Total production from the three wells is approximately 11,000 BOE/d gross. Boomvang Conger East Breaks 643/642/688 (APC 30% WI) East Breaks 598 (APC 100% WI) Garden Banks 215 (APC 25% WI) East Breaks599 (APC 33% WI) ! Anadarko is participating in the recompletion operations of the GB nd 215 #8 ST1 well. Completion operations are progressing and ! The East Breaks 688 #6ST well was brought on line in the 2 Qtr. Anadarko expects the well to be on line during the 3rd Qtr. Initial production from the well was ramped up to a rate of 46 MMcf/d gross. 9 NYSE:APC
  10. 10. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – PRODUCING PROPERTIES (CONT.) – – MAJOR DEVELOPMENT PIPELINE – Red Hawk Caesar / Tonga Complex Garden Banks 877 (APC 50% WI) Green Canyon 683/726/727/770 (APC 33.75% WI pending MMS approval) ! Recompletion operations were concluded on the GB 877 #1 ST 2 well in the 2nd Qtr. The new zone was brought on line and the well is ! Development activities at the Caesar-Tonga complex continued to progress in the 2nd Qtr. Anadarko and its partners continued to refine currently producing 12 MMcf/d gross. the field development plan and spud the GC 770 #1 well in early July. ! The GB 877 #2 ST2 well watered out prematurely and is currently In addition, all partners have agreed to the unit operating plan and a shut-in. Forward proposed plans for the wellbore include formal unitization proposal has been made to the MMS. sidetracking to a new fault block in early 2009. Blind Faith ! Anadarko is also currently proposing a third well (GB 877 #3) in the field, with plans to initiate drilling operations in late 2008. The Mississippi Canyon 695/696 (APC 25% WI) – Chevron operated prospect targets new fault blocks, with proven field pay in addition to several new horizons. If successful, the well would be completed in ! The Blind Faith semi-submersible production platform continued early 2009 and on line in the 2nd half of 2009. with its mooring installation and commissioning activities in the 2nd Qtr. The eight mooring lines were successfully installed on the facility. Operations in the 3rd Qtr involve installation and commissioning of the flowlines and pipelines, as well as final platform commissioning. ! Completion operations on the fourth Blind Faith well, MC 696 #5, were finished in the 2nd Qtr. Production from the Blind Faith field is rd th expected either late 3 Qtr or 4 Qtr 2008. 10 NYSE:APC
  11. 11. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – MAJOR DEVELOPMENT PIPELINE (CONT.) – K2 Complex Updip of HKO HKO to LKO Upside Green Canyon 561/562/605/606/518/563/607 (APC 42% WI) Undrilled Potential Anadarko WI Flowlines ! At the K2 complex, initial sidetracking operations finished 2008 Drilling Program successfully on the GC 561 #2 ST1, after the downdip appraisal penetrated the same sands previously encountered in the original wellbore. Significant progress has also been made on the updip Marco K2 Unit sidetrack which provided additional data to support the pay section Polo APC WI: 42% extension of four new hydrocarbon-bearing sands as well as another 400 feet of downdip extension to the existing M-14 sand. The updip lateral is anticipated to be completed as a producer and should be on 0 2 line in mid-2009. A proposal to the partners is expected to be MILES presented by year-end 2008 regarding the optimum enhanced oil recovery technique for the field. Mission Deep Green Canyon 956 (APC 50% WI) ! Early in the 3rd Qtr, Anadarko initiated sidetrack appraisal operations at its Mission Deep discovery. The appraisal well, GC 956 #1 ST2, is being sidetracked approximately 1,700 feet to the east of the initial discovery and 500 feet downdip in block 956. It is targeting the Middle Miocene sands. 11 NYSE:APC
  12. 12. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION Gulf of Mexico – EXPLORATION – ! Anadarko is currently drilling the Shenandoah prospect (Walker LOUISIANA TEXAS Ridge 8), which spud in early June. The well has a Lower Tertiary New Orleans (Wilcox) objective and is located in 5,815 feet of water with a proposed total depth of 31,000 feet (30,500 feet total vertical depth). Anadarko is Blind Faith operator and holds a 30% working interest. Partners include Conoco- Tonga West Caesar Phillips (40%), Cobalt (20%) and Marathon (10%). ! Anadarko also is participating in the Sturgis North prospect (Atwater Vito Valley 138), which spud in early February and has Middle and Lower Sturgis North Miocene targets. The well is located in 3,490 feet of water with a K2 Complex proposed total depth of 31,150 feet. Anadarko and partners, Chevron Shenandoah APC acreage (operator), Statoil-Hydro and Devon Energy each hold a 25% working Exploratory Drilling interest in this exploratory well. Heidelberg Major Developments Mission Deep ! The Vito exploration well (Mississippi Canyon 984) is scheduled to spud late 3rd Qtr to early 4th Qtr. The well is a middle Miocene test and has a projected total depth of 29,500 feet in 4,000 feet of water. Anadarko is the operator with 20% working interest, along with Statoil-Hydro (25% WI) and Shell (55% WI). Shell will operate after the exploration well has been drilled. ! The Heidelberg exploration well (Green Canyon 859) is scheduled to rd spud in late 3 Qtr. The well is a Miocene target that is on-trend with the Tonga West discovery and has a projected total depth of 28,500 feet in 5,025-foot water depth. Anadarko holds a 44.25-percent working interest and is the operator. Our partners in Heidelberg include Mariner (12.5% WI), ENI (12.5% WI), Exxon (9.375% WI), Cobalt (9.375% WI), Hydro (12.0% WI). 12 NYSE:APC
  13. 13. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION International / Frontier Net Volumes* Capital* 2Q08 1Q08 2Q08 $ MM MBbls/d MBbls/d 20 30 Alaska 21 51 8 Algeria 56 17 16 China 17 0 77 Other 0 88 130 TOTAL 94 – DEVELOPMENT – *Data may not add to totals due to rounding. Alaska China ! Average gross oil production for the Colville River Unit during the 2nd ! During the 2nd Qtr, oil production averaged 46,000 Bbl/d gross from Qtr was up slightly from the 1st Qtr at approximately 112,000 Bbl/d Bohai Bay. gross. Five new development wells were drilled and completed during ! Development drilling continued, with four wells (two multi-laterals) the quarter, including the first of eight wells at the new Qannik drilled in the CFD 11-1 field during the quarter. development. Brazil ! Construction of the Qannik facilities has been completed and first oil was achieved in early July, three months ahead of schedule. ! The sale of the Peregrino project is progressing towards transaction close, which should be around year-end 2008. Algeria ! During the quarter, oil production from the Hassi Berkine South and the Ourhoud Central Processing Facilities was down to 419,000 Bbl/d gross due to a planned shutdown, which was completed in mid-April. ! BKNE-B field development was approved by the Algerian authorities. The first two wells are expected on line in the 3rd Qtr 2008. ! The El Merk project team launched the competitive FEED, and site preparation began during the quarter. 13 NYSE:APC
  14. 14. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION International / Frontier – EXPLORATION – Brazil Ghana ! We mobilized the Deepwater Millennium drillship from the Gulf of ! Plans to sanction the Jubilee Field in 2008 remain on track. Inquiries Mexico to Brazil to carryout our exploration program. The rig is have been made in the FPSO market, and it appears that several currently drilling the Wahoo pre-salt prospect in BM-C-30, which suitable options are available to achieve 2010 first production. Project awards on several long-lead items are anticipated in 3rd Qtr 2008. will be drilled to a total depth of 19,750 feet and will test several play concepts in the pre-salt section. This prospect is a direct offset to the announced Caxareu pre-salt discovery, where one well in this complex ! The drilling rigs Erik Raude and Blackford Dolphin are expected to was tested for over 10,000 Bbl/d of light sweet oil. Anadarko is arrive before the end of 2008 and begin the exploration, appraisal and operator and has a 30% working interest in the Wahoo prospect. development well drilling program. In addition, the partners have contracted for two additional rigs to arrive in 2009. ! Following completion of operations on the Wahoo prospect, the Millennium will re-enter the Serpa pre-salt prospect. Petrobras will ! Following the completion of drilling operations of the Mahogany #2 continue to operate the well and has procured the needed drilling well, seven miles northeast and updip from the Hyedua discovery tools to allow completion of operations to the proposed total depth of well, the partnership performed two drillstem tests on selected 19,500 feet. As previously reported, Serpa was suspended before intervals of the 165 feet of pay sand encountered in the well. Both the reaching the primary objective due to insufficient rig capacity. The lower and upper tests flowed at a facility constrained rate of partnership is encouraged with the secondary sands encountered in approximately 5,000 BOE/d. The oil gravity was between 36 and 39 the pre-salt section to dates. Anadarko has a 30% working interest in degree API. In both tests, the oil was found to be high quality and the prospect. sweet. The well will be temporarily abandoned and may be used as a producing well in field development. We have now increased our China estimated recoverable resources expectations to between 500 MMBOE and 1.8 BBOE in this Upper Cretaceous fan discovery. ! Anadarko acquired 900 km of 2D seismic data on deepwater Block nd 43/11 in the South China Sea during the 2 Qtr. This acquisition completes a 2,000 km survey, which commenced in late-2007. Acquisition of a separate, 1,500 km 2D seismic survey should be rd completed in early 3 Qtr. Preparations continue for a planned 4,000- th meter exploratory well during the 4 Qtr 2008. 14 NYSE:APC
  15. 15. Second Quarter 2008 ANADARKO PETROLEUM CORPORATION International / Frontier – EXPLORATION (CONT.) – West Africa Ghana Blocks ! Anadarko acquired interests in five blocks (5.1 million acres) within the emerging West African Upper Cretaceous fan play trend. Two of the blocks are located offshore Sierra Leone. Anadarko will operate these blocks with a 50% working interest. The other three blocks are located offshore Liberia. Anadarko will operate these blocks with a 65% working interest. Current expectations are to drill a well in Sierra 2 Leone in 2009 and commence a 4,700 km 3D seismic shoot in Liberia in early 2009. Partners in all five blocks will be Repsol and Woodside. Indonesia ! In the Bukat block in the Tarakan Basin, Anadarko participated in a 2 multi-azimuth 3D survey over the Aster Field (420 km ) and an 1,800 2 nd km 3D in the deepwater fold belt region of the block during the 2 Qtr. Sierra Leone / Liberia Blocks ! Anadarko elected to divest its 51% interest in the onshore BungaMas PSC located in South Sumatra to focus attention and investment on the offshore and deepwater portfolio, where the company operates four blocks and is a partner in two additional blocks. 15 NYSE:APC