Anadarko Petroleum Corporation announced its 2016 initial capital expectations and guidance.
Article continues below
Anadarko's U.S. onshore activities will be reduced the most, by almost $2.5 billion in capital investments year over year, as the company preserves its opportunities, including in two of the highest-returning onshore assets in North America – the Delaware and DJ basins – for a more compelling price environment.
The company is reducing its U.S. onshore rig count by 80 percent to five operated rigs, from an average of 25 in 2015, while focusing on its base production and retaining the flexibility to leverage its inventory of approximately 230 drilled but intentionally uncompleted wells.
In the Delaware Basin, Anadarko plans to run four operated rigs, which will be directed toward delineation and lease maintenance rather than development activities.
To date, the company's successful activities in this play have reduced well costs, identified additional prospective zones and doubled the estimated recoverable resources to more than 2 billion BOE. In the DJ Basin, the company expects to operate one rig, compared to seven in 2015.
Anadarko's 2016 Gulf of Mexico program will focus on the company's capital-efficient tieback oil opportunities, as well as on advancing appraisal activities.
By leveraging its existing infrastructure, Anadarko's tieback opportunities offer returns of more than 30 percent at today's strip prices. These activities will include tiebacks at Lucius, Caesar/Tonga and K2.
In addition, Anadarko plans to advance existing discoveries through appraisal activities at Shenandoah and Phobos. One exploration well is planned at the Warrior prospect, which if successful, could be a tieback to K2.
In 2016, Anadarko's planned international activity will include efforts to advance its Paon oil discovery offshore Côte d'Ivoire toward potential development with one appraisal well, a drillstem test, and two exploration wells.
Once activities are completed in Côte d'Ivoire, the rig is scheduled to return to Colombia to conduct additional exploration drilling activities.
Offshore Ghana, the company expects to achieve first oil at the TEN complex in the third quarter of 2016. In Mozambique, Anadarko expects minimal funding in 2016 as it works three parallel paths toward a Final Investment Decision (FID) for its LNG project.
These processes include securing the necessary legal and contractual framework, progressing more than 8 million tonnes per annum of off-take toward long-term sales contracts and advancing project financing. ■