Anadarko Petroleum Corporation has lowered its 2003 targets for crude oil and natural gas sales based on development drilling results and production issues. Anadarko also increased earnings guidance for the second quarter of 2003 and full year due to higher commodity prices, which more than offset the lower volumes.
Oil and gas sales volumes for 2003 are now expected to be 190 million barrels of oil equivalent (BOE), including 46 million BOE for the second quarter, down from the previous forecast of 200 million BOE and 48 million BOE, respectively.
"Production problems in three areas—the Gulf of Mexico, Algeria and Qatar—require that we revise our production volume expectations at this point," said Robert J. Allison, chairman, president and CEO of Anadarko.
"Because Anadarko has a broad portfolio of producing fields and development projects, we are usually able to offset downside performance with upside production from other fields. Production in other areas is on target or ahead of forecast this year, but unfortunately the magnitude of the shortfalls, particularly in the Gulf of Mexico, is too large to offset," Allison said.
"While we believe the shortfalls in Algeria and Qatar are temporary, the production issues in the Gulf of Mexico will affect us next year as well. We are still targeting strong production growth in 2004, but we recognize that earnings and returns matter as much as volume targets.”
“Lately, we've seen some property acquisitions that offer better returns for our shareholders, so we may choose to add projects to our portfolio that would let us achieve our target," he concluded.
The company is experiencing lower-than-expected production, primarily due to performance from three fields in the Gulf of Mexico—Hickory, Tanzanite and Pardner. In the Hickory and Tanzanite fields, natural gas production dropped unexpectedly from two high-volume wells due to down-hole mechanical failures.
Following re-completion of the Hickory well to a higher zone, production was restored at lower rates. Meanwhile, the company opted to produce two new wells in these fields from zones that are deeper than the initial targets in order to maximize recoveries.
This has delayed production from the original target zones. These zones are expected to produce at higher rates. The company expects that reserve estimates for these fields will not be significantly affected by these issues.
Also, the company's Pardner field recently came on production at rates much lower than anticipated. Technical studies are under way to understand why the well is not producing as expected and to determine if a repair can be made to increase the volumes.
In Algeria, despite early production from the Ourhoud field, Anadarko's net oil sales volumes for the year are expected to be below the company's previous forecast as a result of delays in several pipeline projects that are currently under construction.
Daily production close to target levels has been achieved for short periods this year, indicating some progress has been made with these projects. These pipeline projects are expected to be completed later this year.
In Qatar, start-up delays mainly due to weather will reduce expected volumes for the second quarter of 2003 and the full year. Following the installation of a new production facility, the Al-Rayyan field was restarted in May and is currently producing more than 20,000 barrels of oil a day (gross).
Production is expected to end the year at 25,000 barrels a day, rather than 35,000 barrels a day previously forecast, as a result of delayed drilling of additional development wells and production limitations.
Anadarko Petroleum Corporation is one of the world's largest independent oil and gas exploration and production companies. Houston-based Anadarko is active in the US, Canada, Algeria, Qatar and Venezuela and is executing strategic exploration programs in several other countries. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
