Anadarko Petroleum posted a net loss of US$830 million in Q3 2016, as the US independent moves forward with its deal with Freeport McMoRan (FCX) and shifts its focus to oil with the deepwater Gulf of Mexico on its priority list.
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Walker. Images from Anadarko. |
The $830 million loss shows quite an improvement when compared the $2.24 billion loss Anadarko posted in Q3 2015.
"Anadarko delivered strong operating performance and generated net cash of $785 million during the quarter," said Al Walker, Anadarko chairman, president and CEO. "We are increasing our 2016 full-year divestiture-adjusted sales-volume guidance by 8 MMboe from the midpoint of our initial expectations and further enhancing our financial position with line of sight to more than $4 billion of monetizations for the year.”
Walker said that during the period, Anadarko accelerated activity with its $2 billion deepwater Gulf of Mexico property deal with FCX, which remains on track to close in Q4 2016. The acquisition will be immediately accretive upon closing, he said, which will double both Anadarko's total Gulf of Mexico production and its working interest in Lucius.
“One of the attractive things about the Freeport McMoRan oil and gas transaction beyond being able to increase, if not double our position in Lucius, was being able to look at the infrastructure that we were taking on for additional tiebacks that were currently in inventory from Freeport or through being able to provide production handling agreements to third-parties who need to come across the platform in order for something to be productive,” Walker said on its Q3 earnings call. “We've gone from seven operated facilities in the Gulf of Mexico to 10 now. Our ability to leverage those into opportunities like Constellation, I don't think that's going to be a one and done. I think we're going to see more of that.”
Anadarko said it plans to use approximately $1.8 billion of its cash on hand to fund the Gulf of Mexico acquisition and plans to redeem its remaining $750 million of senior notes due September 2017.
During the period, Anadarko leveraged its infrastructure position to acquire a 33% working interest and operatorship of the Constellation (formerly Hopkins) discovery from BP. The field is expected to be tied back to the Constitution spar.
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Gulf of Mexico operations. |
According to Darrell E. Hollek, Anadarko executive VP of operations, BP left Constellation (formerly known as Hopkins) in the Pliocene, which he said is not a very expensive development.
“You'll see us drilling our first development well here next year in 2017 and we should see production in 2018,” Hollek said. “We would expect these wells to produce 15,000 b/d type wells. Exactly how many we'll need to drill, we haven't work through that, but it was a great opportunity for us and like Al [Walker] said, because of our infrastructure, it provided a great opportunity for us to sort of leverage our way into this.”
In the Gulf of Mexico, the company increased oil sales volumes by 18% to 65,000 b/d when compared to the Q3 2015, which Anadarko contributes to the low cost development activity as it tied back newly completed wells to Lucius, K2 and Caesar/Tonga.
When looking at the Shenandoah, one of the company’s largest discoveries in its history, Anadarko’s Darrel Hollek, executive VP of operations, confirmed that the project is in the pre-FEED stage and that the company is far from making a final investment decision.
“We’ll be looking at drilling the sixth well before the end of the year,” Hollek said. “As we contemplate sanctioning Shenandoah, we will be mindful of what we can do on the margin with the capital.”
The US independent’s game plan for its capital includes the “three D’s,” as Anadarko describes, which are: onshore Delaware and DJ basins, and the deepwater Gulf of Mexico. Between the three D’s, the company expects considerable oil growth within the next five years.
Collectively, with the onshore assets, Anadarko’s operations have been streamlined, its financial position strengthened, and is confident to deliver a 10-12% compounded annual oil growth rate over the next five years. Walker said.
In Q3 2016, Anadarko’s sales volumes of natural gas, oil and natural gas liquids totaled 72 MMboe, or an average of 780,000 boe/d.
Internationally, Anadarko conducted a successful drillstem test of its Paon field offshore Côte d'Ivoire as it continues to evaluate the potential commerciality of this discovery, the company said.
“We've had good exploration success there [Côte d'Ivoire],” Walker said. “I think the reason that we've not gone beyond that is, we're still trying to understand what we believe to be the commercial solution for the discoveries we've had, and in particular for the natural gas associated with the Paon potential development. I think once we have an understanding of the commerciality of that play, we'll talk more about the development. But at this juncture, I would describe the success we've had as quite good. But that does not correlate yet into a commercial discussion, until we have a gas contract that we believe in fact gives us that development opportunity.”
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