Anadarko reports fourth-quarter loss, record yearend sales volumes

Anadarko Petroleum Corp. reported a fourth-quarter net loss of $770 million, decreasing net income by $1.145 billion.

For yearend 2013, Anadarko reported net income of $801 million and cash flow from operating activities of $8.888 billion.

The company reported 2013 sales volumes of natural gas, crude oil, and natural gas liquids totaling a record 285 million boe, a 7% year-over-year increase in daily sales volumes. It also reported a 194% reserve-replacement ratio.

Anadarko estimated its proved reserves at yearend 2013 were 2.79 billion boe, 72% of which was categorized as proved developed. At yearend 2013, Anadarko’s proved reserves were 55% natural gas and 45% liquids.

Onshore activity

Anadarko’s US onshore operating areas reported a 25% increase in oil volumes for 2013 vs. 2012. Growth was attributed to record production in the Wattenberg field, Eagle Ford shale, and East Texas-North Louisiana horizontal play, the company said.

The Wattenberg horizontal program averaged more than 56,000 boe/d in 2013, 34,000 boe/d higher than 2012, with the fourth quarter averaging more than 72,000 boe/d.

The company in October announced a property exchange with Noble Energy Inc. consolidating Anadarko’s core acreage position and enabling more efficient development planning and utilization of infrastructure, the company said (OGJ Online, Oct. 21, 2013).

Earlier that month, Anadarko reported temporary delays to its expansion of capacity in the Greater Wattenberg area caused by flooding. The disruption was expected to reduce the company’s total estimated full-year sales volumes by 2.5 million boe (OGJ Online, Oct. 7, 2013).

Wattenberg crude oil export capacity has since expanded with the Plains Rail Terminal, which began operation in November. Construction is more than 90% complete at the Lancaster plant and the Front Range pipeline, both of which are expected to be commissioned during first-quarter 2014.

Activity in the Eagle Ford, East Texas/North Louisiana horizontal and Marcellus contributed to an average increase of 59,000 boe/d in 2013 in the Southern and Appalachia region. Evaluation continued during the fourth quarter in the Wolfcamp prospect in the Delaware basin, as the company has drilled 29 wells and is currently running seven operated rigs.

Other activity

Anadarko in 2013 started production at the El Merk development in Algeria. All three facilities are now operational, with recent net production achieving a rate of more than 30,000 b/d.

In the deepwater Gulf of Mexico, the company completed installation of the 80,000-b/d Lucius spar, with the topsides expected to be towed to location in this year’s first quarter.

Lucius is progressing on schedule toward starting production in this year’s second half. Construction on the Lucius-look-alike Heidelberg spar is more than 70% complete, remaining on schedule begin production in 2016. The TEN development, which was sanctioned and received approval from the government of Ghana in 2013, also is expected to begin production in 2016.

Following the Anadarko-operated Shenandoah-2 appraisal well, which encountered more than 1,000 net ft of oil pay, and oil discoveries at the nearby Coronado and Yucatan prospects, Anadarko enhanced its ownership position in, and will become the operator of Coronado. Anadarko is the only company with ownership in all three discoveries in the Shenandoah basin.

Anadarko and its partners are accelerating appraisal activity in the basin with appraisal wells under way at Coronado and Yucatan, and a rig committed to drill delineation well at Shenandoah beginning in this year’s second quarter.

The Shenandoah basin has the potential to be one of the largest oil accumulations ever discovered in the gulf, the company said.

The company continued exploration and appraisal of Mozambique’s Offshore Area 1 block with two discoveries and six successful appraisal wells in 2013.

Anadarko said the company and its partners continue to make progress marketing LNG sourced from the Anadarko-operated Offshore Area 1 in Mozambique, where the company in April 2013 drilled a new natural gas accumulation (OGJ Online, Apr. 18, 2013).

The partners have reached multiple nonbinding heads of agreement, including one with Eni SPA in December 2012 (OGJ Online Dec. 21, 2012), for long-term LNG sales to buyers in premium Asian markets covering two thirds of the first 5-million tonne/year train.

Anadarko’s overall 2013 deepwater exploration and appraisal program reported a 67% success rate.

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