Anadarko keeping the pressure up for big projects



By Kristen Hays, Houston Chronicle

THE WOODLANDS, TEXAS — In recent years, Anadarko Petroleum Corp. has spent big to beef up and diversify its production portfolio in the U.S. and elsewhere. Now’s the time to bring exploration success to fruition by developing mega-projects already in the pipeline, CEO James Hackett said Tuesday.

Even if crude prices continue their recent upswing, he said, the best use of that additional cash is to reinvest it in exploration and production projects.

“We’ll make that decision as it comes,” Hackett said at the company’s annual meeting with analysts, noting no immediate plans for more acquisitions.

The Houston-based independent explorer and producer expects to increase production by up to 3 percent this year and spend a fifth of its reduced capital spending budget of $4 billion to $4.5 billion on exploration.


Fewer cuts

While Anadarko cut spending amid lower oil and natural gas prices and slumping demand in the global recession, other independents have slashed more.

Al Walker, Anadarko’s chief operating officer, said the company also is spending one-fifth of its budget on mega-projects, including finds in the Gulf of Mexico, offshore Ghana and offshore Brazil. Several major projects are slated to start producing from 2011 through 2013, Walker said.

Chevron also has a string of new projects scheduled to begin production in the coming years, executives from the San Ramon, Calif.-based oil major said at its annual analyst meeting, also Tuesday.

Those include Chevron’s Gorgon and Wheatstone liquefied natural gas projects in Australia as well as Gulf crude production from its Jack and St. Malo fields.

George Kirkland, executive vice president of global upstream and gas, told analysts that Chevron has begun engineering and design for a new Gulf production platform for the Jack and St. Malo fields that will have capacity to produce 120,000 to 150,000 barrels of oil equivalent per day.


Higher profile

Anadarko’s international positions, as well as its foothold in U.S. natural gas shale plays, has transformed it from a high-cost, low-return and spotty exploration company to one “poised to dramatically improve its exploration,” Bernstein Research analyst Neil McMahon said in a recent report to investors.

That, McMahon said, makes Anadarko “an increasingly attractive acquisition target for the majors.”

Such rumblings about Anadarko aren’t new, and other analysts have speculated that oil majors may consider buying independents to increase reserves and gain new positions in the downturn. However, so far deals haven’t stretched beyond buying certain assets, such as BP’s acquisitions of some Chesapeake Energy U.S. gas shale stakes last year.

Hackett told reporters Tuesday that the company will do right by its shareholders, “and as a public company, we obviously have to be mindful of the fact that if somebody believes we’ve done a good job, there is some risk that somebody may make you an offer you can’t refuse.”


Tax criticism

However, Anadarko isn’t seeking buyers.

“Our view is you don’t necessarily plan your business around that, and we never have,” he said.

Asked by an analyst about the Obama administration’s proposal to repeal some tax breaks for U.S. production while imposing a new excise or severance tax on Gulf production, Hackett answered with his trademark bluntness.

“It’s remarkable to me that we have an administration potentially penalizing its domestic champions at the same time they say they want energy security,” he said.


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