Anadarko's Colorado Operation Update

Zacks

Anadarko Petroleum Corp. (APC) provided an update on its operations at the Greater Wattenberg area of northeastern Colorado subsequent to the devastating flood that occurred in early Sep 2013.  Anadarko operates over 5,800 wells, 2,500 storage tank facilities and 3,200 miles of pipeline in the Greater Wattenberg area.

Extensive flooding prompted the company to shut down 675 operating vertical wells. The majority of Anadarko’s locations were unharmed owing to its sincere adherence to pro-environment standards, safety guidelines and facility construction requirements. Also, no environmental impact related to the company’s drilling or hydraulic fracturing activities was detected.

Transportation infrastructure was badly hit with roads, bridges and rail witnessing massive damages. This disrupted the movement of heavy equipment such as rigs and compression units needed for its drilling, completions and construction activities in the area. Anadarko anticipates temporary delays in its expansion efforts will shrink overall projected sales volumes by roughly 2.5 million barrels of oil equivalent (BOE) in 2013.

Despite the setback, Anadarko is optimistic of its total sales volume to still be within the previously estimated range of 281 to 287 million BOE in 2013. Increasing reserves at Anadarko’s prospects in the Permian and the Utica basins will drive the company’s sales volume. This will be further supported by the restart of the Caeser/Tonga block by year-end 2013 and favorable results from its Wolfcamp prospects in the Delaware basin.

Internationally, Anadarko’s El Merck project in Algeria is expected to contribute 30 thousand barrels per day (MBbls/d) of production by 2013. The company will accelerate its activities in the Wattenberg field as conditions gradually improve. Anadarko plans to drill 350 to 400 new horizontal wells in 2014 and conclude its infrastructure development initiatives.

Recent study show tremendous reserve potential at Anadarko's key operational basins. Permian is expected to provide reserves worth more than billion barrels of oil with a life-span of 100 years while Algeria’s oil and natural gas output is expected to double in the next 7 to 10 years. Anadarko is also bolstering its natural gas reserves with the ongoing shale boom acting as a catalyst.

Currently, Anadarko carries a Zacks Rank #2 (Buy). Other better-placed oil and gas operators include Zacks Ranked #1 (Strong Buy) Matador Resources Co. (MTDR), Stone Energy Corp. (SGY) and Swift Energy Co. (SFY).

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