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Anadarko plans to evaluate Wyoming's Powder River Basin play potential in 2019: CEO

Highlights

Aims to drill, produce 10-15 PRB wells this year

Now has 300,000 gross acres after 2018 acquisitions

Turner formation is main play focus right now

Houston — Anadarko Petroleum will spend 2019 appraising and evaluating its 300,000 gross acre position in Wyoming's Powder River Basin, an emerging asset within its US onshore portfolio, the company's top executives said Wednesday.

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Anadarko invested $181 million on acquisitions last year in the Powder River play, where the company will focus on Converse County in the play's southern areas. Plans call for drilling and production of 10 to 15 wells in 2019.

"The Powder River Basin is a coming attraction," Anadarko CEO Al Walker said during his company's fourth-quarter earnings conference call. "This basin holds significant opportunity and attractive oil production characteristics."

The company's main focus is the Turner formation, one of several stacked pay zones which other companies have also found productive. EOG Resources, for example, sees 4,800 feet of stacked pay throughout its 400,000 net acres which include not only Converse but Campbell and Johnson counties to the north and northwest.

If results at year-end are "supportive," Anadarko stands to gain a "much better idea" of the potential of not only the upstream portion of the play, but also of how that fits with midstream infrastructure for both existing and future needs, Walker said.

ONE POWDER RIVER BASIN RIG

Anadarko has one rig running in the Powder River Basin. The company currently has around 16,000 b/d of oil equivalent production in Wyoming, including 11,000 b/d of oil. That is up from 12,000 boe/d and 8,000 b/d of oil, respectively, in Q3.

In other production, Anadarko reported record company-wide oil sales volumes for Q4 of 407,000 b/d, up 3% sequentially and up 15% from the same period in 2017 adjusted for divestitures. Higher oil volumes were spurred by strong oil delivery from US basins in Texas and Colorado and also Ghana development, according to the company's Q4 operations report.

Total sales volumes company-wide were 701,000 b/d of oil equivalents, up 2% sequentially and 14% year on year, on the same basis.

Oil has comprised an increasing proportion of Anadarko's production. In Q4 2018, the company's oil volumes made up 58% of its production, compared to 35% in the same quarter four years earlier and 43% in Q4 2016.

US onshore volumes in Q4, chiefly from the DJ Basin in Colorado and the Delaware Basin in West Texas and New Mexico, totaled 457,000 boe/d, 41% of it oil. That was up 17% year on year.

The jump in onshore output came from liquids which totaled 284,000 b/d in Q4, up more than 20% year on year. Of that figure, 163,000 b/d or 57% came from the DJ Basin and 100,000 b/d or 35% from the Delaware Basin, which is essentially the western Permian Basin, the biggest producing oil and gas play in the US with current production of about 3.8 million b/d of oil and more than 12 Bcf/d of natural gas.

US GULF PRODUCTION SEEN 'STABLE'

The company's Gulf of Mexico fields produced 142,000 boe/d in Q4, 85% oil, up about 1.5% from Q4 2017. Anadarko called its Gulf of Mexico production "relatively stable" year on year.

The company has seven operated US Gulf production facilities and its operations in that arena consist largely of drilling new wells in nearby fields and hooking them up to the facilities, which are called "tie-backs."

In January, BP hooked up or "tied back" its deepwater Constellation field to Anadarko's Constitution spar offshore Central Louisiana. The field, which BP operates with 67% (Anadakro has 33%) will produce 15,000 boe/d at peak.

International sales volumes in Q4 grew 23% to 102,000 b/d from the same period in 2017, on a divestiture-adjusted basis. Apart from Ghana, infill drilling helped maintain plateau at the El Merk field, Anadarko said.

The company affirmed its 2019 capital budget of $4.3 billion-$4.7 billion released in November, with 70% of it or $3.15 billion allotted to US onshore operations that include the Powder River Basin.

Another $500 million will be spent in the deepwater US Gulf, and the rest split fairly evenly between Algeria and Ghana, exploration and the Mozambique LNG project where a decision on sanction is expected by midyear.

Total sales volumes are targeted at 712,000 boe/d-740,000 boe/d this year, while oil sales volumes projected for 2019 are 410,000 b/d-435,000 b/d.

By contrast, 2018 capex spent was $4.26 billion while total sales volumes were 666,000 boe/d, compared with 672,000 boe/d in 2017.

-- Starr Spencer, starr.spencer@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com