Anadarko Petroleum Corporation APC has raised its fourth-quarter 2015 sales volume guidance based on better-than-expected production from its core oil-producing regions in the Wattenberg field and Delaware Basin. The announcement comes during a time when crude prices have hit multi-year lows.
This Woodlands, TX-based oil and natural gas exploration and production (E&P) company has increased its fourth-quarter sales volume projection to the range of 70–72 million barrels of oil equivalent (MBoe) from the earlier guided range of 68–70 MBoe. The midpoint of its new estimate is 15 MBoe per day (MBoe/d) above the prior projection. In the fourth quarter of 2014, Anadarko had registered sales volume of 79 MBoe.
The company further announced that the development of its Heidelberg field in the Gulf of Mexico (GoM) has progressed ahead of schedule. Anadarko also mentioned that, subject to regulatory approvals, first oil is expected in the first quarter of 2016 from the three initial wells drilled. Despite the continued slump in global crude prices, many oil producers have ramped up production from new GoM fields. Since these offshore projects take a very long time to develop, operators prefer to bring them online as soon as possible in order to start recouping their investments.
Anadarko remains focused on improving cash margins to enhance portfolio value. Hence, the company plans to lower capital spending below the mid-point of the current guidance of $1.2–$1.4 billion. Notably, the company had reduced drilling cost by 15% per foot in Wattenberg field and by about $4 million per well in the Wolfcamp Shale in the third quarter of 2015. Anadarko expects to achieve further reductions of $1.5–$2 million per well.
The company intends to continue improving cash flows and optimizing shareholder value by focusing on asset monetization. Year to date, Anadarko has monetized assets worth approximately $2 billion. Asset divestments will enable the company to seize growing opportunities in domestic unconventional resource plays as well as help it to fund ongoing exploration activities.
Zacks Rank
Anadarko Petroleum carries a Zacks Rank #3(Hold). Some better-ranked players from the same space are Antero Resources Corporation AR, Contango Oil & Gas Company MCF and Devon Energy Corporation DVN. While both Antero and Contango sport a Zacks Rank #1 (Strong Buy), Devon holds a Zacks Rank #2 (Buy).
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