Anadarko Optimistic on Near-Term Growth, Keeps Reins on Capex

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Researched by Industrial Info Resources (Sugar Land, Texas)--Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) is cautiously optimistic about its future, tempering plans for expanded exploration and production in some of North America's most prosperous areas with a disciplined approach to capital spending in the near term. Industrial Info is tracking $13.73 billion in active projects involving Anadarko.

Anadarko recorded capital expenditures of $3.31 billion for 2016, compared with $5.89 billion in 2015. The company saw a net loss of $3.07 billion, which was an improvement from 2015's $6.69 billion net loss; revenues stood at $7.87 billion, compared with $8.7 billion in 2015.

Anadarko has been keeping its coffers full through the sale of assets: More than $4 billion in properties were sold off last year, and executives expect another $3.5 billion before the end of the current quarter. They also are optimistic that the per-barrel price of oil will reach a level that will buttress expansions of its drilling operations in Texas' Delaware Basin, Colorado's Denver-Julesburg Basin and the deepwater Gulf of Mexico. Al Walker, chairman, president and chief executive officer of Anadarko, said in a quarterly earnings call that if prices remain high and development steady, the company's oil and gas production could grow between 12% and 14% over the next 10 years; in particular, he believes a surge in production is very possible in 2018.

Nonetheless, Anadarko is maintaining a conservative stance throughout the first half of 2017, opting not to outspend whatever earnings it makes on oil sales. Specifics on capital investments will not be announced until March. The company's caution is justified, given the dour results for 2016 from other Oil & Gas Production companies; for examples, see February 1, 2017, article - ExxonMobil Takes Big Hit in 2016 from Weak Prices, Heavy Impairment Charges, and January 31, 2017, article - Chevron Marks Up Loss for 2016, Slashes Capital Spending to $19.8 Billion.

Among the largest projects to be proposed by Anadarko in the Gulf of Mexico is the $4 billion Shenandoah Offshore Platform, a semi-submersible production platform that currently is designed for more than 80,000 barrels per day (BBL/d) of crude oil from the Shenandoah Field. The company is working toward a joint development agreement for the subsea production system with companies including BP plc (NYSE:BP) (London, England), Chevron Corporation (NYSE:CVX) (San Ramon, California), ConocoPhillips (NYSE:COP) (Houston, Texas) and Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands). For more information, see Industrial Info's project report.

At Anadarko's existing development in the Gulf's Constellation Field, the company is proposing a $160 million subsea tieback in the Green Canyon Block 627, where recoverable reserves are estimated to be 500 million barrels. The tieback will go to the Constitution Spar in Green Canyon Block 680. Anadarko expects to drill its first development well in 2017. For more information, see Industrial Info's project report.

Late in third-quarter 2016, Anadarko acquired the deepwater Gulf of Mexico assets from Freeport McMoRan Incorporated's (NYSE:FCX) (Phoenix, Arizona) oil and gas subsidiary for $2 billion. The deal added about 80,000 net barrels of oil-equivalent per day, more than 80% of which is oil, according to Anadarko's web site. Executives said the acquisition enabled stronger investment in the company's onshore efforts, as well.

"We've concentrated our U.S. onshore activities and our industry-leading oil levered positions in the Delaware and the Denver-Julesburg," Walker said in the earnings conference call. "Through the acquisition of Freeport's Gulf of Mexico properties, we have the largest operated infrastructure in position in the deepwater Gulf today, creating a tremendous cash-generating machine to fund future growth."

Industrial Info is tracking $16 million in quarterly maintenance and inspection-related projects at Anadarko's facilities in and near the Denver-Julesburg Basin over the next two years. Industrial Info also is keeping tabs on Anadarko's global projects, including the massive Afungi LNG Liquefaction Plant in Mozambique.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.