Oil and natural gas exploration and production play, Anadarko Petroleum Corporation (APC - Analyst Report) provided an operational update on its core assets - Wattenberg in Colorado, Eagleford Shale in Texas, Greater Natural Buttes in Utah and Marcellus Shale in Pennsylvania. The output from each of these prospects beat the gross production mark of 100,000 barrels of oil equivalent per day (BOE/d) during November 2012.
The Wattenberg prospect recently witnessed record production level in excess of 45,000 BOE/d. The drilling success at the Niobrara and Codell formations led to securing of returns of more than 100% during the third quarter 2012.
Anadarko is working on advanced technological methods to increase lateral lengths, footage drilled, and completion stages and well density as well as reducing drilling cycle times. These efforts will help drive production growth while deploying capital efficiently. The company estimates 10% sequential growth to come from Wattenberg from the third quarter onwards.
The liquids-rich Eagleford Shale also kept its pace and contributed markedly to volume expansion. The drilling cycle so far in the fourth quarter 2012 on an average was less than 9.5 days per well which represented a 25% upside from the year-ago figure and also registered its best figure of 5.4 days for a 12,000-foot well. The company went on to observe production surge in its East Texas horizontal program and in the Permian Basin’s Avalon Shale and Bone Spring plays located in west Texas and southeast New Mexico.
Production growth from the major properties signifies Anadarko’s ability to effectively execute large-scale projects and tap the maximum reserve potential from its resource plays. The strength in U.S. oil and gas production year to date lends credence to the company’s ability to meet its production target for the year in the range of 265–267 million barrels of oil equivalent (BOE). This will be achieved in spite of the company scrapping ethane in specific fields.
Capital efficiency has also been Anadarko’s key strengths. The company expects a 15 cent per BOE improvement in operating costs in the fourth quarter. This takes the new operating cost guidance to $3.90 to $4.00 per BOE for the said quarter.
Anadarko currently retains its short-term Zacks #3 Rank (Hold rating). The Zacks Consensus Estimates for the fourth quarter and full year 2012 are presently pegged at 79 cents and $3.44 per share, respectively.
Another exploration and production operator with a Zacks #3 Rank is Noble Energy Inc. (NBL - Analyst Report). The company is firmly abiding by its on-shore production ramp-up goals in the Denver/Julesburg basin in Colorado and Marcellus plays with the possible installation of a second unit to the Lilli facility in Colorado.
Based in the Woodlands, Texas, Anadarko is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and NGLs. With a market capitalization of $36.74 billion, the company has 4,800 employees.