Anadarko cuts spending, stalls well completions

Anadarko Petroleum Corp. on Mar. 3 said it will cut spending 33% during 2015 compared with 2014 and will reduce drilling and defer 125 onshore well completions in response to low oil prices.

Anadarko Petroleum Corp. on Mar. 3 said it will cut spending 33% during 2015 compared with 2014 and will reduce drilling and defer 125 onshore well completions in response to low oil prices.

“We don’t see value in chasing growth in this environment,” Al Walker, Anadarko chairman, president, and chief executive officer, told investors and analysts in a conference call. “Our focus continues to be on getting better, not necessarily bigger, while ensuring we are well positioned to accelerate activity as costs become more aligned with commodity prices and returns improve.”

Anadarko outlined a $5.4-5.8 billion budget, saying 60% is allocated for US onshore plays. Executives anticipate a 5% oil sales growth in 2015 over 2014.

The Houston independent plans to devote about half of its budget to Wattenberg field in Colorado, saying its horizontal program there continues to yield profits.

“The resilient economics of Wattenberg field continue to make it an attractive place to invest in 2015 as it generates better than 30% before-tax rates of return at current strip prices,” a news release said.

Anadarko noted its Eagle Ford activity in South Texas generates before-tax rates of return of more than 20% at current oil futures prices. The firm has cut its active rigs from 10 to 5 in the Eagle Ford.

Regarding other promising assets, executives said they remain committed to investing in the Wolfcamp play of the Delaware basin of West Texas. The company has identified 5,000 drill sites there.

Overall, Anadarko said it plans to reduce its short-cycle US onshore rig activity by 40%.

Referring to its “long-cash cycle,” Anadarko plans to drill 9-12 deepwater wells off Colombia, Kenya, and in the Gulf of Mexico. About 10% of the 2015 budget is for deepwater exploration.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.

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