Anadarko cuts 2015 capex by 33pc
OREANDA-NEWS. Anadarko cut its 2015 capital spending plan by 33pc to \\$5.4bn-5.8bn as the US independent opts to slow its output growth in light of the 50pc plunge in crude prices.
Anadarko, like other US producers such as Chesapeake and Linn Energy, is cutting back on rig use to focus operations on areas that offer the best return. North American producers are facing the brunt of the downturn because it is more expensive to extract oil from unconventional sources such as shale, with UK bank Barclays expecting a cut by 30pc or more if Nymex WTI futures settle in the \\$50/bl range.
"We believe it is prudent to reduce capital investments and position the company for the future, rather than to pursue year-over-year growth," chief executive Al Walker said in the company's annual investor conference.
The company has announced asset sales of more than \\$700mn so far this year.
As a result of the capex cut, the independent plans to reduce its short-cycle US onshore rig use by 40pc and defer about 125 onshore well completions. Of the total capex, short cycle projects will get 55pc, mid-cycle 30pc and long-cycle 12pc.
The short-cycle budget will focus on the Wattenberg acreage in northeastern Colorado, where the company generates better than 30pc before tax return at current strip prices. It will also allocate capital to Eagle Ford in Texas, which generates a rate of return of more than 20pc.
The mid-cycle projects, which are expected to generate significant growth in the next 1-3 years, include the Wolfcamp shale in the Delaware basin of West Texas. The company expects to drill 9-12 deepwater exploration and appraisal wells, under its longer-term projects, in Colombia, Kenya and the Gulf of Mexico. It will also spend on its Shenandoah discovery in the Gulf of Mexico and its Mozambique LNG project.
The company is aiming for oil output of about 200,000-204,000 b/d in the US, 63,000-65,000 b/d in Algeria and 22,000-24,000 b/d in Ghana in 2015. It expects US natural gas output of 2.425 mcf/d-2.475 mcf/d and natural gas liquids (NGL) of 109,000-117,000 b/d. As of year-end 2014, the company had about 2.86bn bl equivalent of proven reserves.