Anadarko Hits Natural Gas Off Mozambique, Initiates LNG Study

Anadarko Petroleum Corp. (APC) said Monday that it had struck natural gas in a well it drilled to appraise a prospect in the deep waters off Mozambique.

The results prompted the Houston company to take a significant step toward possibly developing a natural gas liquefaction facility to export super-chilled gas from the East African country.

The Barquentine-2 appraisal well found 230 feet of natural gas play in the Rovuma Basin, the company said. The well, drilled in 5,400 of water, was the first in the Windjammer, Barquentine and Lagosta complex, which Anadarko believes to hold at least 6 trillion cubic feet of recoverable natural gas.

"Our first appraisal of the Barquentine discovery matched our expectations, confirming our seismic modeling and providing confidence in our geologic interpretation of this world-class accumulation," Bob Daniels, Anadarko's senior vice president of Worldwide Exploration, said in a news release.

With the results, Anadarko and its partners in the 2.6-million-acre Offshore Area 1 block, hired KBR Inc. (KBR) and Technip (THP.F, TEC.PA) to do preliminary engineering and design work exploring the potential for a gas export facility.

"Anadarko and partners believe LNG development in Mozambique may ultimately require as many as six LNG trains," said Simmons & Co. analyst Bill Herbert. "It remains our understanding that it is not Anadarko's intention to fund and construct an LNG plant, but rather have a more seasoned LNG partner come in and build the plant."

Anadarko has a 36% working interest in the block. Its partners include Mozambique's national oil company Empresa Nacional de Hidrocarbonetos, which has a 15% stake, and subsidiaries of Mitsui and Cove Energy PLC (COV.L), which hold 20% and 8.5% stakes, respectively.

Anadarko said the appraisal well also showed static pressure communication between it and a discovery well two miles away. The company said it will now move the drill ship the south to drill an exploration well that will also serve to appraise its Windjammer discovery.

Daniels told investors last week that the company planned to add a second rig of Mozambique in the fourth quarter. Anadarko, which holds drilling rights on more than 14 million acres off East Africa, also has leases over a significant portion of Kenya's deep waters and plans to drill prospects there next year, Daniels said.

Shares of Anadarko recently traded 0.35% lower at $65.86.

-By Ryan Dezember, Dow Jones Newswires, 713-560-6670, ryan.dezember@dowjones.com

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