Anadarko's Outlook Firm Despite Ban - Analyst Blog

Anadarko Petroleum Corporation (APC) yesterday reaffirmed its production and capital spending guidance despite the government-imposed, six-month ban on deepwater drilling in the Gulf of Mexico.

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

The Incident – Suspension Follows

Following the April incident of fire in BP plc’s (BP) Deepwater Drilling Rig located offshore Louisiana on MississippiCanyon block 252, President Obama ordered a six-month suspension on deepwater exploration operations in the Gulf. The government estimates between 20 million and 43 million gallons of crude having leaked into the Gulf so far and BP PLC is still struggling to contain the spill.

Anadarko’s Update on Gulf Operations

In its release, Anadarko assured stockholders of its intention to meet its production targets. The company has already taken numerous steps to safeguard its portfolio during the moratorium in the Gulf of Mexico. Like other companies with operations in the Gulf, Anadarko stated that it is looking to move some of its assets to foreign waters.

Following the government orders, Anadarko has ceased operations on a number of drilling projects in the Gulf of Mexico. Prior to the stay on drilling, the company was operating on three projects in the Gulf of Mexico, Lucius (KeathleyCanyon block 875), Callisto (MississippiCanyon block 875) and Heidelberg (GreenCanyon block 903). The company has provided the notice of force majeure to drilling contractors of three of its rigs in the Gulf of Mexico, and is using its one remaining rig in order to continue the completion, workover and other non-drilling activities on the existing wells during the suspension.

Woodlands, Texas-based Anadarko Petroleum is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and natural gas liquids (NGLs). Anadarko’s deep and diversified asset base, low-risk and predictable production profile, global business development approach and brilliant execution capability reflect visible upside over the medium-to-long term.

As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies.