Anadarko Petroleum Corp. announced details of its 2013 capital program and guidance, and provided additional information regarding its significant U.S. onshore growth opportunities, deepwater and international mega projects and industry-leading exploration program.
"With the outstanding momentum we established in 2012 and the opportunities our deep portfolio provides, we expect 2013 to be one of the best years in our company's history," Anadarko President and CEO Al Walker said. "Our 2013 capital investments will focus on projects that generate rates of return between 30 and more than 100 percent in the current commodity-price environment, while spending within cash flow. We expect to deliver sales-volumes growth of approximately five percent, with the year-over-year increase comprised almost entirely of higher-margin oil sales volumes. The projected increase in oil sales volumes will be largely driven by accelerated activity in our Wattenberg and Eagleford horizontal programs and the anticipated ramp up of oil volumes during the year at our El Merk facilities in Algeria.
"Accelerating value by advancing our high-margin deepwater and international oil and LNG (liquefied natural gas) mega projects remains a priority in 2013, and we expect to continue pursuing carry arrangements and opportunistic divestitures to further enhance the capital efficiency of our portfolio," added Walker. "Following our highly successful 2012 exploration program where we nearly doubled our original targeted resources, we plan to be among the most active deepwater explorers in the world again in 2013. We expect to drill approximately 25 deepwater exploration and appraisal wells this year, including high-potential prospects in the Gulf of Mexico and three potentially play-opening international opportunities."
2013 Capital Program and Expectations
Total 2013 capital investments are expected to range from $7.2 to $7.6 billion. This range excludes capital investments associated with Western Gas Partners, LP, a separate, publicly traded entity controlled by Anadarko and included in its consolidated financial statements. An approximate breakout of Anadarko's 2013 capital program is included below:
2013 Capital Expenditures by Area
$7.2 - $7.6 Billion
U.S. Onshore 60%
Gulf of Mexico 15%
Gulf of Mexico
Anadarko's 2013 unprecedented activity level in the Gulf of Mexico is under way, with plans to participate in six to eight exploration and appraisal wells during the year. This includes ongoing activity in the Shenandoah mini-basin, where the company already has encountered encouraging results from its Shenandoah appraisal well and the nearby Coronado prospect, with results from the Yucatan prospect expected later this quarter.
The 2013 Gulf of Mexico capital program reflects the benefits of the $556 million carried-interest agreement for the Lucius project, which is expected to fully carry Anadarko's capital costs through first production. The capital program also includes assumptions for a similar potential carry arrangement associated with the Heidelberg development, which is expected to be sanctioned later this year. To further maximize cost efficiencies at Lucius and Heidelberg, Anadarko is implementing a "design one; build two" approach as it moves forward on the construction of two truss spars, each with capacity of 80,000 barrels of oil per day. Lucius is on schedule to achieve first oil in 2014, and Heidelberg is expected to achieve first oil in 2016.
In 2013, Anadarko plans to advance large-scale development projects in Algeria, Ghana and Mozambique, as well as continue a very active exploration program consisting of approximately 20 planned deepwater exploration/appraisal wells.
In addition to the anticipated oil production ramp up at El Merk, expansion projects are under way to increase production from the current 110,000 barrels of oil per day at the Jubilee field offshore Ghana. In 2013, Anadarko plans to continue working with its partners and the Ghanaian government to advance the TEN complex, which will be Ghana's second major deepwater oil development.
In Mozambique, the company continues to advance the massive natural gas resources discovered in the Offshore Area 1 toward first LNG cargoes in 2018. Anadarko and its co-venturers expect to achieve reserve certification in 2013, while continuing to make progress securing oil-linked LNG sales agreements.
During the year, Anadarko expects to test additional opportunities in Mozambique, Kenya and the West African Cretaceous Trend, as well as new areas of activity, including the South China Sea and New Zealand.
In addition, the Board of Directors of Anadarko Petroleum Corp. announced that Al Walker has been elected Chairman of the Board, effective at the end of Anadarko's Annual Meeting of Stockholders on May 14, 2013. He also will continue to serve as President and CEO. Walker, 56, will succeed James T. Hackett. As previously announced, Hackett will serve as Executive Chairman through the company's 2013 Annual Meeting of Stockholders and will retire from Anadarko in June 2013.