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USA: Anadarko Allocates USD 6.9 Bln for 2012 Investments

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Anadarko Petroleum Corporation  today announced its 2012 capital program and guidance, and the highlights of its Investor Conference to be held on March 13, 2012.

“Anadarko is off to a great start in 2012 as it continues to build upon the strong operational results of 2011, while positioning the company for value-focused growth into the next decade,” Anadarko Chairman and CEO Jim Hackett said.

2012 Capital Program and Expectations Total 2012 capital expenditures are expected to be between $6.6 and $6.9 billion. This amount does not include expenditures by Western Gas Partners, LP (WES), a separate, publicly traded entity controlled by Anadarko and consolidated in its financial statements.

“Anadarko’s deep portfolio provides the flexibility to allocate more than 90 percent of our 2012 E&P (exploration and production) capital toward oil and liquids-rich assets, while dialing back U.S. onshore dry gas activity in the currently over-supplied North American natural gas market environment. We expect this capital program to deliver full-year sales volumes in the range of 256 to 260 million BOE (barrels of oil equivalent), which takes into account both the effect of anticipated asset monetizations and reduced natural gas activity. We expect liquids sales volumes to comprise about 45 percent of total sales volumes in 2012, equating to an increase of approximately 25,000 barrels per day over the previous year. Additionally, the capital program reflects our continued commitment to our worldwide exploration program, which has delivered industry-leading results for several years, while discovering many new asset platforms for future growth.”

An approximate breakout of the 2012 capital program is included below:

2012 Capital Expenditures by Area

$6.6 – $6.9 Billion

U.S. Onshore 55%

International 25%

Gulf of Mexico 10%

Midstream/Other 10%

U.S. Onshore

Approximately 55 percent of Anadarko’s 2012 capital budget is allocated to its shorter-cycle U.S. onshore activities, with a focus on liquids-rich opportunities in the Wattenberg field, Eagleford Shale, Permian Basin and emerging liquids-rich East Texas area.

In the Wattenberg field of northeastern Colorado, where the company has identified net resources of between 500 million and 1.5 billion BOE in its Wattenberg HZ program, Anadarko plans to accelerate value realization by increasing the number of operated rigs, from six horizontal rigs currently to eight by the middle of 2012.

In the Eagleford Shale in South Texas, Anadarko doubled the number of identified drill sites to about 4,000, thereby increasing its estimated net resources in the field to more than 600 million BOE. The company plans to run ten operated rigs in the Eagleford and expand its midstream infrastructure during the year to align with anticipated production growth.

In East Texas, Anadarko announced that with horizontal-drilling technology it has unlocked a new liquids-rich play in the Carthage area. In this East Texas HZ opportunity, the company has identified more than 450 drill sites with strong economics and an estimated 300 million BOE of net resources. In 2012, Anadarko plans to operate six to eight rigs and drill approximately 75 wells in the East Texas HZ play.

In the Marcellus Shale in north-central Pennsylvania, Anadarko has increased average well recoveries to approximately 8 billion cubic feet (Bcf) of natural gas per well, and has continued to improve efficiencies, resulting in a 30-percent reduction in drilling cycle times over 2010. Given the current market conditions for natural gas, the company expects the number of rigs (operated and non-operated) in the play to decrease from 21 to 13 over the course of the year.

International

Anadarko has allocated approximately 25 percent of its 2012 capital budget to its growing international portfolio, with a significant focus on Africa.

Offshore Mozambique, where Anadarko has made one of the most significant natural gas discoveries of the last decade, its partnership will continue to work toward achieving reserve certification in 2012 and a final investment decision (FID) in late 2013. As announced this morning, the partnership conducted a successful drillstem test at the Barquentine-2 well that flowed at an equipment-constrained rate of 90 to 100 million cubic feet of natural gas per day (MMcf/d), which supports a well-design capability of 100 to 200 MMcf/d. Additionally, Anadarko is increasing the estimated recoverable resource range of the Offshore Area 1 discovery area by another 2 trillion cubic feet (Tcf). Anadarko’s discovery area in the deepwater Rovuma Basin is now estimated to hold 17 to 30-plus Tcf of recoverable natural gas.

In Algeria, the El Merk mega project is approximately 90-percent complete and expected to begin to produce significant volumes by the end of the year. In West Africa, the Jubilee Unit is expected to average between 70,000 and 90,000 barrels of oil per day in 2012, while the partnership continues remedial work on several existing producing wells and initiates the Phase 1A drilling program. The company and its partners also recently completed a successful drillstem test in the TEN (Tweneboa, Enyenra and Ntomme) complex offshore Ghana that flowed at equipment-constrained rates of more than 20,000 barrels of high-quality oil per day. The partnership expects to submit a Plan of Development for the TEN complex later this year.

Gulf of Mexico

About 10 percent of Anadarko’s 2012 capital program is directed to its deepwater Gulf of Mexico activities. As announced today, Anadarko and the project’s co-owners safely achieved first production at the Caesar/Tonga mega project. Caesar/Tonga production is currently increasing and is expected to reach approximately 45,000 BOE per day from three subsea wells, which are being produced through the company’s Constitution spar on Green Canyon block 680.

Also in the Gulf, Anadarko continues to make progress on the Lucius development, which is located in the Keathley Canyon area. Fabrication of the 80,000 barrel-per-day, 450 MMcf/d truss spar is under way, and first production is expected in 2014.

The company also expects to initiate front-end engineering and design work for the development of its Heidelberg discovery in anticipation of project sanctioning later this year. The Heidelberg-2 appraisal well, announced in February, encountered more than 250 net feet of oil pay and supported the company’s net resource estimate of more than 200 million BOE for the field.

Exploration The company’s exploration program delivered more than 730 million BOE of net discovered resources in 2011. In 2012, Anadarko expects to continue an active program, investing approximately 20 percent of its capital budget in exploration, with plans to drill approximately 25 high-impact, deepwater exploration/appraisal wells worldwide. The most active areas of exploration and appraisal drilling this year are expected to be in East Africa, with seven to 10 planned wells offshore Mozambique; in West Africa, also with seven to 10 planned wells in the Ivorian and Sierra Leone/Liberia basins; and in the deepwater Gulf of Mexico, where Anadarko plans to return to pre-moratorium levels of drilling with six to eight planned wells.

“The strong results of 2011 and the list of significant achievements in just over two months in 2012 demonstrate our strategy is working,” said Al Walker, Anadarko President and Chief Operating Officer. “The announced 2012 capital program is aligned with estimated cash flow for the year, and would generate significant free cash flow at current strip prices. As an added measure to protect cash flows, we’ve locked in additional tactical hedges for oil volumes in 2012. We believe our announced 2012 capital program represents the appropriate level of investment to maintain financial discipline, while accelerating the value of our near-term oil and liquids-rich opportunities in the U.S. onshore, funding current mega-project developments, and continuing to build for the future with an active worldwide exploration program.”

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2011, the company had 2.54 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies.

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France: Total Allocates Billions for Upstream in 2012

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French oil major Total said today it intended to continue to actively manage its asset portfolio with, in particular, a program of non-strategic asset sales.

The 2012 budget for organic investments is $24 billion , of which more than 80% will be dedicated to the Upstream.

In the Upstream, Total expects in 2012 to implement its strategy to accelerate production growth and increase the profitability of its asset portfolio.

The ramp-up of Pazflor in Angola and the start-up of several major projects, including Usan in Nigeria, Angola LNG, and Bongkot South in Thailand, will contribute to  production growth in 2012 and to achieving the objective of growing production by 2.5% per year on average between 2010 and 2015.

“The successful start-up of the Pazflor field in Angola was the crowning achievement of an important year for Total. This start-up and the ones to follow will ensure a return to production growth in 2012 and the years to come”, Chairman and CEO Christophe de Margerie said.

After launching Ichthys in Australia, announced at the start of  this year, Total said it intends to continue work on the drivers for post-2015 growth by preparing to launch, notably, projects in West Africa, Russia and Canada.

Income Soars

The Group today announced 2011 adjusted net income of $15.9 billion which is an increase of 17 per cent when compared to full year results from 2010.

Commenting on the results de Margerie said:

“In a period of economic slowdown, ongoing tensions on the global oil supply supported the Brent price above 110 S/b in 2011. This environment has been favorable for the Upstream, but it was difficult for the Downstream activities, notably in Europe. In this context, the Group posted a 17% increase in earnings, expressed in dollars, compared to 2010. With its track record of operational excellence, the Group also confirms its constant improvement in safety performance.”

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USA: ConocoPhillips Allocates USD 14 Billion for E&P in 2012

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U.S. oil & gas  exploration and production company, ConocoPhillips, announced a 2012 capital program of $15.5 billion. The 2012 capital program for E&P is $14.0 billion and includes $2.2 billion for worldwide exploration, $0.4 billion of capitalized interest and $0.7 billion for the company’s contributions to the FCCL business venture and loans to other affiliates.

Approximately 60 percent of the E&P capital program will be spent in North America. This represents an increase in the U.S. Lower 48 and Canada compared with prior years, reflecting improved market conditions, with additional emphasis on liquids-rich resource plays and high-return investments.

Capital spending in Alaska is expected to be slightly down compared to 2011 levels, and will be directed toward development of the existing Prudhoe Bay and Kuparuk fields, as well as fields on the Western North Slope.

In Europe, Asia Pacific and Africa, total spending is expected to be approximately 40 percent of the E&P capital program.

In the North Sea, spending is planned for existing and new opportunities in the Greater Ekofisk Area, the Greater Britannia fields and development of the Jasmine and Clair Ridge projects.

“The 2012 capital program reflects our strategic emphasis on delivering value by investing in the most profitable opportunities,” said Jim Mulva, chairman and chief executive officer.

The company will continue its focus on accessing, testing and appraising material opportunities in both conventional and non-conventional oil and gas plays. ConocoPhillips plans further appraisal of the Poseidon discovery in the Browse Basin, offshore Australia, and the Tiber and Shenandoah discoveries in the Gulf of Mexico. The company also plans to test material prospects in the Gulf of Mexico and Kazakhstan. Delineation of the company’s position in the Eagle Ford shale play will continue, as will pilot programs in shale plays in the Canadian Horn River Basin, Australia and Poland.

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