Anadarko Strikes Again in Ghana – Analyst Blog

Texas-based, Anadarko Petroleum Corporation (APC) announced a major discovery of approximately 174 net feet of high quality oil in two zones at the Owo prospect in the Deepwater Tano Bloc, located offshore Ghana. The well drilled to a depth of 12,765 feet produced light crude oil between 33 and 36 degrees API.

Deepwater Tano Bloc is jointly owned by Tullow Oil, Europe’s largest independent oil explorer by market value (49.95% interest), Anadarko (18%), Kosmos Energy (18%), Sabre Oil & Gas (4.05%), and the Ghana National Petroleum Corporation (10%).

The Owo discovery marks the third significant offshore find in Ghana by the partnership (Deepwater Tano license partners). Earlier in June 2007, the partnership had discovered the Jubilee field with an estimated recoverable reserves of more than 600 million barrels and an upside potential of 1.5 billion barrels. The field is expected to deliver its first oil production by the second half of 2010. The second discovery, in March 2009, was Tweneboa field with an estimated 1.4 billion reserves.

The company along with other operators plans to further develop the newly discovered field by side-tracking the well to establish the size of the oil field.

Anadarko Petroleum Corporation is one of the largest independent oil and natural gas exploration and production (E&P) companies of the world. The company is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and natural gas liquids (NGLs).

The company aims to achieve over 3 billion barrels of oil equivalent (BBOE) of proved reserves in five years, dig roughly 30 deepwater exploration and appraisal wells in 2010, make six significant discoveries by 2016, and maintain a strong balance sheet.

For the full year 2010, the company expects sales volumes in the range of 230 to 234 million barrels of oil equivalent (MMBOE) and 57 to 60 MMBOE range for the second quarter. Capital spending for 2010, including expensed G&G (geology and geophysics), is still estimated in the range of $5.3 to $5.6 billion. 

Anadarko Petroleum’s deep and diversified asset base, its low-risk and predictable production profile, global business development approach and brilliant execution capability reflect visible upside over the medium-to-long run. Moreover, a strong balance sheet, investment-grade rating and access to liquidity will enable the company to pursue new strategic and tactical growth opportunities.

However, we expect the present constrained commodity environment and the Gulf of Mexico moratorium to weigh on Anadarko’s financial performance, at least in the near term. Hence, we see the stock performing in line with the broader market and maintain a Neutral recommendation.