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Anadarko to base 2019 capex on $50/b oil: CEO

Houston — Anadarko Petroleum will continue using a $50/b oil price assumption in 2019, the company's CEO said Wednesday, even though current US prices are about 30% above that level.

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Still, Anadarko's strategy is to deliver 10% or greater oil output growth year after year, and in 2018 expects more than 13% oil growth, which translates to 15% or more on a per debt-adjusted share basis, CEO Al Walker said during a conference call on the company's third-quarter earnings.

"We don't need to seek significant additional oil growth this year to achieve our annual objective," Walker said.

"As we look ahead to 2019 we'll continue to use a $50 [per barrel] oil price environment assumption to produce healthy multi-year double-digit oil growth," he said.

The company plans to release its 2019 capital budget later this quarter, he said.

During the three-year industry downturn from 2015-2017, oil prices averaged just below $50/b. Prices had been above $100/b in the first half of 2014 but dropped precipitously in the second half of that year, in part caused by excess volumes from prodigious US shale production.

In the following couple of years, upstream operators' capital budgets fell by half or more. They recovered some in 2017 and 2018 and are widely expected to rise again this year by at least single-digit percentages. But efficient companies such as Anadarko have learned to thrive at lower oil prices and lower investment levels. They have made their operations very efficient, to the point that they can produce oil and gas volumes at increasingly lower and lower breakeven costs. In the Permian and some other places, breakeven costs can be under $30 for the most efficient producers.

Anadarko's total sales volumes company-wide averaged 682,000 b/d of oil equivalent in Q3, up 9% from the same period in 2017. That included 397,000 b/d of crude oil volumes, up 12% from a year ago, and 1.071 Bcf/d of natural gas, which was about flat with Q3 2017.

Oil volume growth was led by US shale plays. Onshore domestic oil production averaged a record 175,000 b/d, up 37% year on year on a divestiture-adjusted basis. -- Starr Spencer, starr.spencer@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com