Second-Quarter 2015 OPERATIONS REPORT. July 28, John Colglazier Senior Vice President 832/ Robin Fielder Director 832/

Transcription

1 INVESTOR RELATIONS John Colglazier Senior Vice President 832/ Robin Fielder Director 832/ Jeremy Smith Director 832/ WATTENBERG FIELD, COLORADO Second-Quarter 2015 OPERATIONS REPORT July 28, nd Quarter 2015 Highlights. 2 Overview.3 Rockies.. 4 Southern & Appalachia 7 Gulf of Mexico. 10 International & Frontier.. 13 Deepwater Rig Schedule.. 16 Glossary of Abbreviations.. 17 ANADARKO PETROLEUM CORPORATION 1

2 SECOND-QUARTER 2015 HIGHLIGHTS FOCUSING ON HIGHER-MARGIN OIL Anadarko delivered sales volumes of 77 MMBOE during the 2 nd quarter of 2015, highlighted by year-over-year oil sales-volume growth of more than 42,000 BOPD. Oil sales volumes exceeded the top end of guidance by 15,000 BOPD driven by strong performance in the Wattenberg field. PRESERVING VALUE IN THE U.S. ONSHORE The company achieved record oil sales volumes in the U.S. onshore during the quarter, averaging 174,000 BOPD, a 30% increase year over year. Anadarko continued to achieve significant increases in efficiencies highlighted by a 56% increase in wells drilled per rig in the Rockies year over year. CONTINUING A SUCCESSFUL EXPLORATION PROGRAM The Yeti exploratory prospect in the Gulf of Mexico discovered more than 270 net feet of oil pay in Miocene-aged reservoirs. The Kronos-1 prospect in deepwater Colombia has encountered net feet of natural gas pay in the upper objective. The well is still drilling to test a deeper objective and is anticipated to reach TD in the 3 rd quarter. ACTIVELY MANAGING THE PORTFOLIO Subsequent to quarter end, Anadarko signed an agreement to divest its Bossier natural gas assets and related midstream infrastructure for $440 million. ADVANCING MEGA PROJECTS Anadarko ramped production at the Lucius spar to its nameplate capacity of 80,000 BOPD during the quarter. Fabrication was completed for the topsides of the 80,000 BOPD Heidelberg spar. The hull is on location in the deepwater Gulf of Mexico and the project remains on schedule for first oil in mid The TEN development was approximately 63% complete at the close of the quarter. The 80,000-BOPD project remains on schedule for first oil in mid Anadarko and its partners named the EPC contractor consortium to build the onshore liquefaction facilities in Mozambique. The partnership also increased the initial capacity by 20% to two 6 MMTPA trains with no change to the expected costs. Upending Heidelberg spar, Gulf of Mexico Note: All volumes discussed in this report exclude production associated with China and EOR to provide a divestiture-adjusted or same-store sales comparison. Divestiture-adjusted or same-store sales volumes are intended to present performance of Anadarko s continuing asset base, giving effect to recent divestitures. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of While Anadarko believes that its expectations are based on reasonable assumptions as and when made, no assurance can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this presentation, including Anadarko s ability to realize its expectations regarding performance in this challenging economic environment and meet financial and operating guidance, achieve its production targets, timely complete and commercially operate the projects and drilling prospects identified in this presentation, consummate the transaction described in this presentation, enter into a definitive agreement with the CCS JV, successfully plan, secure necessary government approvals, finance, build, and operate the necessary infrastructure and LNG park, and achieve its production and budget expectations. Other factors that could impact any forward-looking statements are described in Risk Factors in the company s 2014 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings and press releases. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements. 2

3 OVERVIEW SALES VOLUMES Second-quarter sales volumes totaled 77 MMBOE, or 846,000 BOE/d, which was within guidance. U.S. oil volumes grew by 17,000 BOPD over the 1 st quarter of 2015 primarily due to strong growth out of Wattenberg and Wolfcamp and the ramp of Lucius to full capacity. Anadarko increased its full-year 2015 oil sales-volume guidance by more than 15,000 BOPD due to continued strong well performance, base production enhancements and reduced downtime. Anadarko lowered its full-year 2015 sales-volumes guidance to a range of 298 to 302 million BOE to reflect the divestiture of the Bossier assets. CAPITAL Anadarko continued to improve its cost structure through operational efficiencies and savings achieved by working with service providers. Second-quarter capital investments of $1.28 billion were below the low end of the guidance range of $ $1.63 billion, excluding WES capital investments. The operational efficiencies achieved to date are forecasted to support Anadarko drilling more than 100 additional onshore wells than initially budgeted and adding incremental completion crews in Wattenberg and the Delaware Basin by year end while staying within the full-year capital guidance of $5.4 - $5.7 billion, excluding WES capital investments. SALES VOLUMES 2Q15 2Q15 2Q15 2Q15 2Q14 2Q14 2Q14 2Q14 Oil MBOPD NGLs Gas MMcf/d MMBOE Oil MBOPD NGLs Gas MMcf/d MMBOE Rockies , , Southern & Appalachia , Lower , , Alaska Gulf of Mexico Total U.S , , International Same-Store Sales , , China & EOR* Total Company , , *The China Subsidiary divestiture closed in 3Q14 and the EOR divestiture closed in 2Q15. CAPITAL INVESTMENTS 2Q15 $MM Rockies 448 Southern & Appalachia 342 Lower Alaska 31 Gulf of Mexico 155 Total U.S. 976 International 228 Midstream** 144 Capitalized Items/Other 53 Total Company 1,401 ** Includes WES capital investments of ~$122 million 3

4 ROCKIES Anadarko s Rockies assets delivered sales volumes averaging 386,000 BOE/d during the 2 nd quarter, a 10% increase over the same period in Oil volumes increased by 3% over the 1 st quarter of 2015 and 30% versus the 2 nd quarter of Wattenberg liquids sales volumes grew more than 38,000 Bbl/d, or 34% year over year. The company continued to make the economic decision to reject ethane, which equated to a net sales volumes reduction of 1.3 MMBOE. The company averaged 9 operated rigs and drilled 112 wells in the 2 nd quarter. This was a 53% reduction from the 19 operated rigs in the 2 nd quarter of 2014 when Anadarko drilled 152 wells, indicating a more than 56% drilling-efficiency improvement in the region. SALES VOLUMES 2Q15 2Q15 2Q15 2Q15 2Q14 2Q14 2Q14 2Q14 Oil MBOPD NGLs Gas MMcf/d MBOE/d Oil MBOPD NGLs Gas MMcf/d MBOE/d Wattenberg Greater Natural Buttes Powder River Basin Wamsutter Other Same-Store Sales , , *The EOR divestiture closed in 2Q15. EOR* Total , , CAPITAL INVESTMENTS AVERAGE RIG ACTIVITY 2Q15 2Q15 1Q15 $MM Operated Operated Wattenberg Greater Natural Buttes Powder River Basin Wamsutter EOR Other Total

5 ROCKIES Wattenberg: The Wattenberg field net sales volumes increased by more than 16,000 BOE/d or 8% from the 1 st quarter of 2015 to an average of approximately 232,000 BOE/d during the 2 nd quarter. Anadarko operated an average of 8 rigs and drilled 96 wells (120 type-well equivalents) during the quarter. The company exited the quarter with 7 rigs. In the first half of 2015, Anadarko focused on optimizing each aspect of drilling and incorporating best practices shared from other assets. Implementing an enhanced wellbore design, along with other efficiencies and process changes, has doubled Anadarko s rig productivity in Wattenberg from approximately 35 type wells per rig year to approximately 70 type wells per rig year. In addition to dramatically improving rig efficiency, these design enhancements will become a permanent part of Anadarko s cost structure. Anadarko expects to intentionally defer the completion of approximately 120 wells in the second half of This is expected to result in Wattenberg production plateauing for the remainder of the year. The company s operated horizontal program averaged more than 182,000 BOE/d, an increase of 8% from the 1 st quarter of The company added 90 MMcf/d of field compression in the 2 nd quarter for a total of 180 MMcf/d in the first half of The additional compression enables Anadarko to lower the average pressure to less than 100 pounds per square inch in the field which enhances system efficiency and improves the base production profile. Phase II of the Lancaster cryogenic gas plant was commissioned during the quarter. The 300 MMcf/d expansion increases Anadarko s processing capacity at the Lancaster complex to 600 MMcf/d. Construction is ongoing at the centralized oil stabilization facility, which is estimated to startup in the 4 th quarter of Centralized Oil Stabilization Facility, Colorado 5

6 ROCKIES Greater Natural Buttes: The company operated one rig in the 2 nd quarter and drilled 16 wells. Net natural gas sales volumes averaged 388 MMcf/d for the quarter, down 14% from the 2 nd quarter of Anadarko reduced completion costs by 18% from the 1 st quarter. Land Grant: Anadarko continues to accelerate value on its mineral acreage. Subsequent to quarter end, Anadarko reached a farmout agreement whereby the company will be fully carried on several exploration wells testing a liquids-rich opportunity located on the company s Land Grant. Operations are expected to begin in the 4 th quarter and should conclude by the end of the 1 st quarter of Laramie County, Wyoming: During the 2 nd quarter, Anadarko participated in 14 wells in the emerging liquids-rich play. Results from the 30 producing wells remain strong with initial production rates averaging approximately 1,000 BOE/d. The operator has elected to defer the completion of more than 40 wells in this year s program. This Niobrara and Codell opportunity resides within the company s Land Grant position where Anadarko has minerals-interest ownership of more than 100,000 acres. Laramie County, Wyoming 6

7 SOUTHERN & APPALACHIA During the 2 nd quarter, the Southern & Appalachia region delivered sales volumes of approximately 285,000 BOE/d, an 11% decrease from the 1 st quarter of However, higher-margin liquids volumes increased approximately 4%, highlighted by an increase of more than 5,000 Bbl/d in the Delaware Basin. Due to the commodity-price environment during the quarter, Anadarko made the economic decision to reject ethane, which equated to a net sales volumes reduction of 400 MBOE. The company averaged 17 operated rigs and spud 95 wells in the quarter, compared to 19 operated rigs and 111 wells spud in the 1 st quarter. SALES VOLUMES 2Q15 2Q15 2Q15 2Q15 2Q14 2Q14 2Q14 2Q14 Oil MBOPD NGLs Gas MMcf/d MBOE/d Oil MBOPD NGLs Gas MMcf/d MBOE/d Eagleford Delaware Basin E. Texas/N. Louisiana Chalk/Eaglebine Marcellus Bossier* Hugoton Ozona *Bossier divestiture announced in 3Q15. Other 1 - (41) (5) Total , CAPITAL INVESTMENTS AVERAGE RIG ACTIVITY 2Q15 2Q15 1Q15 $MM Operated Operated Eagleford Delaware Basin E. Texas/N. Louisiana Chalk/Eaglebine Marcellus Bossier* Hugoton Ozona Other Total

8 SOUTHERN & APPALACHIA Eagleford: Anadarko s net sales volumes averaged more than 90,000 BOE/d during the quarter, a 36% increase from the 2 nd quarter of Total liquids sales volumes averaged approximately 64,000 Bbl/d, a more than 17,000 Bbl/d year-over-year increase. Anadarko spud 59 wells using five operated rigs in the 2 nd quarter. The company continues to focus on optimizing field performance and realized a 10% reduction in downtime since the 1 st quarter. During the quarter, Anadarko added 20 MMcf/d of compression capacity to aid in the maintenance of base production. Delaware Basin: Anadarko s net sales volumes for the quarter averaged approximately 33,000 BOE/d, an increase of 22% to the 2 nd quarter of Total liquids volumes averaged more than 23,000 Bbl/d, which is an increase of 27% to The company averaged 7 operated rigs, spud 19 Wolfcamp Shale operated wells and brought 8 wells on line during the 2 nd quarter. The Mi Vida cryogenic gas plant came on line during the 2 nd quarter. Anadarko holds a 50% equity position in the plant, which is designed to add approximately 200 MMcf/d of additional gross processing capacity. 71 miles of pipelines were added to Anadarkooperated gathering systems in the first half of Delaware Basin, Texas 8

9 SOUTHERN & APPALACHIA East Texas/North Louisiana: Anadarko s net sales volumes averaged approximately 60,000 BOE/d during the 2 nd quarter, which was a decrease of 5% compared to the 2 nd quarter of Anadarko averaged four operated rigs and brought 9 wells on line in the quarter. The company s continued focus on efficiencies and renegotiated service contracts drove cost-per-foot savings of 19% for completions and 22% for drilling from the 1 st quarter. Eaglebine: The company decreased average days from spud by 34%, the average drilling cost per foot by 21%, and realized a savings of 20% per completion from the 1 st quarter. Marcellus: Anadarko s net sales volumes averaged approximately 431 MMcf/d during the 2 nd quarter and were impacted by voluntary curtailments due to planned third-party pipeline construction on Transco s Leidy line for the Leidy Southeast Project. Eaglebine, East Texas 9

10 GULF OF MEXICO During the 2 nd quarter, Anadarko s Gulf of Mexico region averaged sales volumes of approximately 83,000 BOE/d, of which more than 77% were higher-margin liquids. Oil sales volumes grew sequentially by 11,000 BOPD as Lucius ramped to nameplate capacity. 2Q15 Oil MBOPD 2Q15 NGLs 2Q15 Gas MMcf/d SALES VOLUMES* 2Q15 MBOE/d 2Q14 Oil MBOPD 2Q15 NGLs 2Q14 Gas MMcf/d 2Q14 MBOE/d Total *Includes the impact of weather-related downtime. 10

11 GULF OF MEXICO DEVELOPMENT Lucius: KEATHLEY CANYON 874/875/918/919 (APC WI 23.8%) Anadarko ramped up production to the spar s 80,000-BOPD nameplate capacity during the quarter. Anadarko continues to enhance value by leveraging its infrastructure in the deepwater Gulf of Mexico. At the end of the 1 st quarter, the Lucius facility began processing the gas from outsideoperated Hadrian South, which was brought on line under a production-handling agreement. Rates are currently stabilized at 300 MMcf/d. Heidelberg: GREEN CANYON 859/860/903/904/948 (APC WI 31.5%) First production remains on target for mid The main topsides module is completely fabricated and has been turned over to the commissioning team. The hull is on location and the mooring lines are completed. Installation operations for flow lines, export lines and suction piles for the mooring system are now complete. Umbilical line installations are scheduled for the 3 rd quarter of The company continues to leverage the efficiencies gained from the Lucius project. Anadarko s design one, build two concept is expected to reduce the fabrication man hours by approximately 40% and the engineering man hours by more than 50%. Caesar/Tonga: GREEN CANYON 683/726/727/770 (APC WI 33.75%) The fifth Caesar/Tonga well reached its target production rate of more than 10,000 BOE/d. A 6 th infill well is scheduled to spud in the 3 rd quarter. K2 Complex: A sidetrack of the Green Canyon 562 #5 well encountered more than 260 net feet of oil pay and was completed. First production is expected in the 4 th quarter. Heidelberg Topsides Completed, Texas Gulf Coast Constitution/Ticonderoga: The Blake 1007 platform rig completed sidetrack operations on the A-4 well and encountered over 90 feet of net oil pay. First production is expected in the 3 rd quarter. Independence Hub: Gross production averaged 61 MMcf/d (48 MMcf/d net) during the quarter. 11

12 GULF OF MEXICO EXPLORATION/APPRAISAL Yeti: WALKER RIDGE 117/157/158/159/160 (APC WI 37.5%) The Yeti-3 appraisal well is expected to be spud in the 3 rd quarter. The Yeti discovery encountered more than 270 net feet of oil pay in Miocene-aged reservoirs and the appraisal well will be located about 2 miles southeast in approximately 5,900 feet of water. The well will appraise the excellentquality Miocene reservoirs seen in Yeti-1, and test additional sections not penetrated in the original discovery. Thorvald: MISSISSIPPI CANYON 814 (APC WI 50%) The Thorvald Miocene test completed operations during the 2 nd quarter. The well is located in approximately 4,800 feet of water. The well tested multiple sub-salt reservoirs in a three-way closure and encountered approximately 80 net feet of oil pay. Anadarko is evaluating the drilling results to determine next steps. Shenandoah: WALKER RIDGE 51/52/53 (APC WI 30%, OPERATOR) The Shenandoah-4 appraisal well spud in the 2 nd quarter. The well is designed to confirm the lateral sand quality and continuity of reservoirs found in Shenandoah-2, which encountered more than 1,000 net feet of oil pay in excellent-quality Lower Tertiary-aged reservoirs. Shenandoah-4 is located approximately 800 feet updip and 0.7 miles northwest of Shenandoah-2. 12

13 INTERNATIONAL & FRONTIER During the 2 nd quarter, the International and Frontier region sales volumes averaged approximately 93,000 Bbl/d. Oil sales volumes decreased sequentially by approximately 20,000 BOPD due to timing of tanker liftings in Algeria. SALES VOLUMES 2Q15 2Q14 CAPITAL INVESTMENTS 2Q15 $MM Alaska 9 9 Algeria* Brazil - - Ghana/W. Africa* Mozambique - - Other - - Same-Store Sales China** - 3 Total Alaska 31 Algeria 8 Brazil - Ghana/W. Africa 93 Mozambique 64 Other 63 Total 259 El Merk, Algeria *Quarterly sales volumes are influenced by size, timing and scheduling of tanker liftings. **The China Subsidiary divestiture closed in 3Q14. 13

14 INTERNATIONAL & FRONTIER DEVELOPMENT Alaska: Gross production from the Colville River Unit averaged approximately 47,000 BOPD during the quarter. Construction on the Alpine West satellite extension continues and drilling is underway. Initial production is expected by year end. Algeria: Gross production averaged approximately 355,000 Bbl/d from the HBNS, Ourhoud and El Merk facilities during the quarter, which was a decrease of 10,000 Bbl/d from the 1 st quarter of The HBNS centralized production facility was shut-in for planned maintenance and inspection work at the beginning of the quarter. Production was restored to normal levels after the work was successfully completed. Cumulative gross production through the HBNS facility surpassed 1 billion barrels in June. Mozambique: OFFSHORE AREA 1 (APC WI 26.5%, OPERATOR) Anadarko and the Area 1 participants named the CCS JV (consortium of CB&I, Chiyoda Corporation and Saipem) to be the onshore LNG liquefaction facility EPC contractor after a competitive FEED process. The partnership also increased the initial development size by 20% to two 6 MMTPA trains with no change to the expected costs. Anadarko and its partners finished drilling the Golfinho 6-well maturation program to advance the project toward development. The partnership continues to work with the government to make progress on the remaining agreements and approvals that are required to support investment. Ghana: Gross production at the Jubilee field averaged approximately 107,500 BOPD during the quarter. The TEN development was approximately 63% complete at the close of the quarter. The third well is being completed and the remaining seven start-up wells are scheduled for completion in the next 12 months. The 80,000-BOPD project remains on schedule for first oil in mid TEN FPSO Turret Installed in May 2015, Ghana 14

15 INTERNATIONAL & FRONTIER EXPLORATION/APPRAISAL Côte d Ivoire: BLOCK CI-103 (APC WI 65%, OPERATOR) Planning is under way for a drillstem test and interference testing as part of the continuing appraisal of the Paon discovery. The program will include additional appraisal drilling which is expected to start in the 4 th quarter of The data from these operations is expected to provide insight on reservoir connectivity, deliverability, fluid properties and indicative data on reservoir size. Positive results will advance the discovery toward commerciality. Colombia: FUERTE NORTE, FUERTE SUR, PURPLE ANGEL, COL 5 AND URA 4 (APC WI 50%, OPERATOR) The Kronos-1 prospect has encountered net feet of natural gas pay in the upper objective, proving the presence of a working petroleum system and validating the geologic and seismic interpretations. The well is still drilling to test a deeper objective and is anticipated to reach TD in the 3 rd quarter. Anadarko and its partner, Ecopetrol, will evaluate the drilling results following the completion of operations to determine next steps. Following completion of the Kronos-1 well, the rig is scheduled to spud the Calasu-1 well. The Calasu prospect is a large four-way structure on the north end of the block complex. It has multiple potential targets. Success at either well would de-risk multiple identified prospects. BLOCKS COL 1, COL 2, COL 6 AND COL 7 (APC WI 100%, OPERATOR) Mobilization for the Esmeralda 3D survey commenced during the quarter. The Phase I acquisition, which is approximately 16,000 km 2, is anticipated to be completed in the 4 th quarter of

16 DEEPWATER RIG SCHEDULE Ensco 8506 Belford Dolphin Noble Bob Douglas* Rowan Resolute* Bolette Dolphin* Ocean BlackHawk* Ocean BlackHornet* *Rigs with two BOP stacks and 2.5 million pound hook loads Ocean BlackHornet Drillship Bolette Dolphin Drillship 16

17 GLOSSARY OF ABBREVIATIONS APC: Anadarko Petroleum Corporation LNG: Liquefied Natural Gas Bbl/d: Barrels of Liquids per Day : Thousand Barrels per Day BOE: Barrels of Oil Equivalent MBOE: Thousand Barrels of Oil Equivalent BOE/d: Barrels of Oil Equivalent per Day MBOE/d: Thousand Barrels of Oil Equivalent per Day BOP: Blow Out Preventer MBOPD: Thousand Barrels of Oil per Day BOPD: Barrels of Oil per Day Mcf/d: Thousand Cubic Feet per Day EOR: Enhanced Oil Recovery MM: Million EPC: Engineering, Procurement and Construction MMBOE: Million Barrels of Oil Equivalent FEED: Front-End Engineering Design MMcf/d: Million Cubic Feet per Day FID: Final Investment Decision MMTPA: Million Tonnes per Annum FPSO: Floating, Production, Storage and Offloading Unit NGL: Natural Gas Liquid HBNS: Hassi Berkine Sud (South) TD: Total Depth HZ: Horizontal TEN: Tweneboa, Enyenra and Ntomme JV: Joint Venture WES: Western Gas Partners, LP (NYSE: WES) Km: Kilometers WI: Working Interest 17