UPDATE: Anadarko Expects New Shale Joint Venture By Year-End
August 04 2010 - 1:26PM
Dow Jones News
Anadarko Petroleum Corp. (APC) said Wednesday it is planning to
announce a joint venture in the Eagle Ford Shale in south Texas by
year-end and that first production of its three mega-projects in
Ghana, the Gulf of Mexico and Algeria is on schedule.
The joint venture will be similar to the $1.4 billion agreement
the company completed in the first quarter with Japan's Mitsui
& Co. (MITSY, 8031.TO) in the Marcellus Shale in Pennsylvania,
the company said.
"We think it's a really bright business decision," said
Anadarko's Chief Financial Officer Robert Gwin, who was speaking to
analysts in a conference call.
The idea behind the Eagle Ford joint venture is to use
additional capital brought by a partner to drill a significant
greater number of wells in a shorter period of time, Gwin said.
In recent years, North American independent gas producers have
learned how to crack the tight rock formations known as shale using
streams of water and chemicals. The development fueled an
unprecedented boom in U.S. gas production, and lured international
companies such as Mitsui, India's Reliance Industries Ltd.
(500325.BY), Total S.A. (TOT) and Statoil ASA (STO). Investment
from these companies helps independents like Anadarko keep drilling
despite restricted cashflow from low natural-gas prices.
Anadarko, which didn't disclose the name of its join-venture
partner, said it has redirected capital toward the Eagle Ford shale
and other onshore U.S. areas that was initially expected to be
invested in the Gulf of Mexico.
Anadarko said its second-quarter results, which were reported
Tuesday afternoon and beat analysts expectations, were helped by
improved operational performance in areas such as the Eagle Ford.
The results demonstrated the drilling moratorium imposed by the
federal government in the Gulf of Mexico after a massive oil spill
hasn't impacted its production or near-term output guidance.
Anadarko's quarterly production exceeded guidance and the
company increased its 2010 production growth guidance to a range of
5% to 7% above last-year levels. The improved production outlook
and the company's better-than-expected second-quarter results
boosted its shares, which were trading recently Wednesday up 3.8%
to $55.17.
Anadarko's adjusted second-quarter earnings of $0.49 per share
were above analysts' expectations of $0.35.
Anadarko also said its three mega projects continue to progress
on schedule, with its giant Jubilee oilfield in Ghana expected to
start production by year end.
In Algeria, the El Merck project is about 50% completed and
first production is scheduled around the end of 2011, while the
Caesar-Tonga project in the Gulf of Mexico is expected to achieve
first production by the middle of 2011.
"We're hopeful to receive the necessary permits to perform
completions on our three wells later this year," Chief Executive
Jim Hackett said.
Houston-based Anadarko expects these three projects to add in
total about 60,000 barrels of oil equivalent per day by 2012.
-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207;
isabel.ordonez@dowjones.com
(Jason Womack in Houston contributed to this article)
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