Current APC Stock Info

With its second quarter reporting, Anadarko Petroleum Corp. (ticker: APC) reported an average production of 631,000 BOEPD and said it reduced its investments by $300 million for the year. In its Delaware basin assets, Anadarko’s oil production averaged 33,000 BOPD—a 52% increase from its Q2 production in 2016.

The company’s 2017 guidance was revised down from 235 to 239 MMBOE cumulative production to 231 to 235 MMBOE, following its shut-in of wells in Colorado and the reduction in production from its Eaglebine/West chalk & and Utah CBM divestitures.

The company closed more than $600 million worth of divestitures during the second quarter. In the face of volatility in production margins, Anadarko chose to reduce its investments by $300 million for the year.

Rigs: 6 in the DJ, 15 in the Delaware

In its current operations, Anadarko has averaged six rigs to its Denver-Julesburg assets and 15 rigs to its Delaware basin assets. In its Delaware acreage, Anadarko made steps towards securing approximately 70% operatorship on acreage it previously was undertaking joint ventures in with Shell.

The company’s Delaware acreage was raised to approximately 28,000 net acres following several acquisitions throughout the year, one of which resulted in 11,000 new acres.

In its DJ acreage, Anadarko spudded 90 wells and turned 46 to sales. It produced an average of 226,000 BOEPD out of its DJ assets, approximately 76,000 BOPD of which was oil.

Q2 2017 conference call Q&A

Q: My first question is on the $300 million CapEx reduction announced last night. It’s 100% nonproductive near-term capital and exploration offshore deflation in midstream. How much more could you cut from nonproductive capital if oil price requires a lower budget or compresses in the back half of the year, and generally for 2018, do you expect to budget with an upstream cash flow still?

Robert Walker, Chairman, President and CEO: I think as we look into the balance of the year, we are going to continue to watch the market, see what oil prices do, try to pace our spending this year and next year as I indicated in my prepared remarks, where we pace that spending with cash flow and rates of return as sort of the guiding lights.

That said, we’ll continue to look for opportunities to improve our capital efficiency this year, and into next year. I think we feel like we’ve got fairly durable assets in both the DJ and the Delaware, and we like what we are seeing from the deepwater Gulf of Mexico from the tiebacks that you probably have had an opportunity at this point to look at in our Operations Report.

So I don’t want to leave you with the impression that there’s nothing that we would overlook. I think we will look at anything. I think, we will continue to look for capital efficiency where we can. At this point, we reduced in that $300 million, $250 million of it is what I think is an upstream spend and $50 million of it is an midstream spend. The midstream spend and other opportunities like that will be invested from cash, where the other is as we think about it is from cash inflows.

Q: Can you comment on longer-term Gulf of Mexico guidance?

Daniel Brown, Executive Vice President, International and Deepwater Operations: From a Gulf of Mexico perspective, I think we feel we’ve got great visibility into maintaining sort of flat production in the Gulf of Mexico, I’d say through 2019 with – I personally think, as we continue to see our appraisal on development be successful. We get some potential to extend that, maybe out another couple of years, so maybe 3 to 5 years of flat. And with incremental exploration success, I think you could see that extended out further, perhaps to have some growth over that time period as well. But very good visibility for the next three years or so to maintain the Gulf of Mexico essentially flat.

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