OPERATIONS REPORT SECOND- QUARTER JULY 26, 2016 ANADARKO PETROLEUM CORPORATION

Transcription

1 ANADARKO PETROLEUM CORPORATION INVESTOR RELATIONS JOHN COLGLAZIER Senior Vice President BRIAN KUCK Director SHANDELL SZABO Director PETE ZAGRZECKI Director SECOND- QUARTER OPERATIONS REPORT JULY 26, nd Quarter 2016 Highlights...2 Overview...3 Rockies... 5 Southern & Appalachia 7 Gulf of Mexico 9 International & Frontier.12 Deepwater Rig Schedule..13 Glossary of Abbreviations....14

2 SECOND- QUARTER 2016 HIGHLIGHTS Breaking Records in the Gulf Anadarko continues to leverage its existing infrastructure in the Gulf of Mexico. Oil volumes from operated facilities increased 7% year over year with Lucius and Caesar/Tonga reaching record-production levels this quarter. During the 2 nd quarter, K2 reached an eight-year-high production rate of 28,000 BOPD. Lucius continues to exceed nameplate capacity of 80,000 BOPD with outstanding well deliverability. The seventh Lucius development well was completed in the 2 nd quarter encountering approximately 475 net feet TVT of high-quality oil pay. Initial flowback data indicates rates in excess of 15,000 BOPD. The Shenandoah appraisal program continues to deliver promising results with the Shenandoah-5 well encountering more than 1,040 net feet TVT of pay, extending the field further east. The company will spud the Shenandoah-6 appraisal well later this year in an attempt to find the oilwater contact. The quality and thickness of the reservoir combined with the excellent fluid properties make Shenandoah a unique Lower Tertiary opportunity. Breaking Records in U.S. Onshore In the Delaware Basin, the team exited the quarter setting a net daily sales-volume record with production reaching 45,000 BOE/d. Total well costs improved by 26% to $5.6 million from $7.6 million the prior year. Delineating the stacked-oil potential remains the top priority while also optimizing spacing, completions and drilling operations. In the DJ Basin, even with a 70% capital reduction year over year, Anadarko achieved 1% sales-volume growth over the 1 st quarter and achieved record sales-volume of 243,000 BOE/d. Costs continue to improve from the prior quarter with drilling days reduced by 15% and LOE/BOE was lowered to $1.29/BOE resulting in a 15% savings. Delivering Value from International Assets Anadarko drilled its second successful horizontal deepwater well offshore Côte d Ivoire at the Paon-3AR sidetrack, encountering approximately 120 net feet TVT of pay. The rig is currently on location at the Paon-5A preparing to perform a drillstem and interference testing program. The data from these operations are expected to provide insight on reservoir connectivity, deliverability and fluid properties. At the Jubilee development, the partnership has determined a long-term solution to convert the FPSO to a permanently moored facility and is expecting the work program to be complete in the 1 st half of The deferred timing of three to four tankers this year will largely be offset by Algerian sales-volumes due to a deferral of planned maintenance. The 80,000-BOPD TEN development off the coast of Ghana was approximately 97% complete at the end of the 2 nd quarter and is on track for first oil in the 3 rd quarter. Accelerating Value through Active Portfolio Management Anadarko s total proceeds received from monetizations year to date are more than $2.5 billion. The 2 nd quarter monetizations include a $476 million secondary offering of WGP common units and the divestitures of Wamsutter and non-core Permian acreage. The company has been very successful monetizing assets during the first half of the year and anticipates surpassing $3.5 billion in total proceeds by year end. 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, identify and complete additional monetization transactions and tie-back opportunities, timely complete and commercially operate the projects and drilling prospects identified in this presentation, and successfully plan, secure necessary government approvals, finance, build, and operate the necessary infrastructure and LNG park. Other factors that could impact any forward-looking statements are described in "Risk Factors" in the company's 2015 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. *Except as otherwise noted, volumes discussed in this report exclude production associated with CBM, EOR, Bossier, and East Chalk 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. 2

3 OVERVIEW Sales Volumes Sales volumes for the 2 nd quarter totaled 72 MMBOE, or 791,000 BOE/d, which was at the midpoint of guidance. U.S. onshore and Gulf of Mexico asset performance was again very strong for the quarter, mitigating the timing of Ghana tanker liftings. Given the performance of the portfolio, Anadarko is raising the midpoint of its full-year sales volumes by 2 MMBOE on a divestiture-adjusted basis to MMBOE. Capital Investments Second-quarter capital investments of $608 million, excluding WES, were below the low end of guidance of $700 million and more than 50% lower than capital investments in the 2 nd quarter of INCREASING FULL-YEAR GUIDANCE TOTAL SALES VOLUMES (MMBOE) March 1, Divestiture-Adjusted MMBOE Updated Guidance (Divestiture-Adjusted) Excludes East Chalk Excludes East Chalk and Wamsutter Excludes East Chalk, Wamsutter and prior year divestitures S A L E S V O L U M E S CAPITAL INVESTMENTS 2Q15 2Q15 2Q15 2Q15 Oil NGLs Gas Oil NGLs Gas MBOPD MBbl/d MMcf/d MMBOE MBOPD MBbl/d MMcf/d MMBOE Rock ies , , Southern & Appalachia , Lower , , Alaska Gulf of Mexico Total U.S , , International* Same-Store Sales , , EOR, Bossier, CBM & E. Chalk** Total Company , , $MM Rock ies 115 Southern & Appalachia 140 Lower Alask a 19 Gulf of Mexico 141 Total U.S. 415 International 137 Midstream* 127 Capitalized Items/Other 49 Total Company 728 * Quarterly sales volumes are influenced by size, timing and scheduling of tanker liftings. ** The EOR divestiture closed in 2Q15, Bossier and CBM divestitures closed in 3Q15, and E. Chalk divestiture closed in. *Includes WES capital investments of $120MM. 3

4 ROCKIES Moxa Powder River W Y O M I N G Wamsutter Anadarko s Rockies assets delivered sales volumes averaging 356,000 BOE/d during the 2 nd quarter, a 1% increase from the previous quarter. Oil volumes were essentially flat from the previous quarter. In the DJ Basin, Wattenberg field sales volumes increased by approximately 5% or 11,000 BOE/d year over year. Greater Natural Buttes DJ Basin UTAH C O L O R A D O APC Acreage APC Land Grant Producing Fields Plant S A L E S V O L U M E S 2Q15 2Q15 2Q15 2Q15 Oil NGLs Gas Oil NGLs Gas MBOE/d MBOPD MBbl/d MMcf/d MBOPD MBbl/d MMcf/d MBOE/d DJ Basin Greater Natural Buttes Wamsutter Other Same-Store Sales , , EOR and CBM* Total , , CAPITAL INVESTMENTS AVERAGE RIG ACTIVITY 1Q16 $MM Operated Operated DJ Basin Greater Natural Buttes Other 1-1 Total * The EOR divestiture closed in 2Q15 and the CBM divestiture closed in 3Q15. 4

5 ROCKIES DJ BASIN: During the 2 nd quarter, net sales volumes increased by approximately 3,100 BOE/d compared with the 1 st quarter of 2016, to an average of 243,000 BOE/d. Year-over-year sales volumes increased by approximately 5% or 11,000 BOE/d. Drilling efficiencies continued to improve in the quarter, as drilling costs per foot of $59 reflect a reduction of 13% from 1 st quarter a more than 30% reduction from 2 nd quarter of LOE/BOE decreased to $1.29/BOE, representing a 15% savings from the prior quarter. Avg. Drilling Cost / Ft $68 Operated Rigs Wells Completed $59 Wells Turned In Line Operated Rigs Wells Completed Wells Turned In Line DJ Basin % Reduction $1.29 LOE/BOE 15% SAVINGS QoQ 1Q16 Avg. Completion Cost / Ft $134 21% Reduction $106 1Q16 1Q Operated HZ Net Sales Volumes Enhancing Margins through Capital Efficiencies (SLE 4,800') MBOE/d E Oil & Condensate Natural Gas Liquids Gas Avg. Gross DC&E Costs (MM) $6 $0 $4.3 $3.3 $

6 SOUTHERN & APPALACHIA Hugoton Delaware Basin Ozona Eagleford W. Chalk/Eaglebine Marcellus E. Texas/N. Louisiana During the 2 nd quarter, the Southern & Appalachia region delivered sales volumes of approximately 275,000 BOE/d, a 2% increase from the 2 nd quarter of The region continued to demonstrate growth even as capital investments were reduced by approximately 60% year over year. In the Delaware Basin, the team averaged a net daily sales-volume record of approximately 41,000 BOE/d and exited the quarter at nearly 45,000 BOE/d. In the Maverick Basin, the company brought 40 Eagleford wells on line in the 2 nd quarter by capitalizing on existing infrastructure. S A L E S V O L U M E S CAPITAL INVESTMENTS AVERAGE RIG ACTIVITY 2Q15 2Q15 2Q15 2Q15 Oil NGLs Gas Oil NGLs Gas MBOE/d MBOPD MBbl/d MMcf/d MBOPD MBbl/d MMcf/d MBOE/d Eagleford Delaware Basin E. Texas/N. Louisiana W. Chalk/Eaglebine Marcellus Other Same Store Sales , E. Chalk, Bossier* Total , Q16 $MM Operated Operated Eagleford Delaware Basin E. Texas/N. Louisiana W. Chalk/Eaglebine 1-1 Marcellus (9) - - Other Total * The Bossier divestiture closed in 3Q15, and E. Chalk divestiture closed in. 6

7 SOUTHERN & APPALACHIA DELAWARE BASIN: Delineating the stacked-oil potential remains the top priority, while also optimizing spacing, completions and drilling operations. Net sales volumes reached record highs in the 2 nd quarter, averaging approximately 41,000 BOE/d, an increase of 26% year over year. Total liquid volumes averaged approximately 29,000 Bbl/d, an increase of 24% over the prior year and 11% compared to the prior quarter. Completions costs per foot were down 17% from the prior quarter and 32% year over year. Drilling costs per foot were down 16% year to date, which includes a single-well record of $88 per foot. Drilling cycle times have improved by 13% from the prior quarter, resulting in less than 21 days from spud to rig release. The team has successfully drilled 11 Wolfcamp wells with lateral lengths of more than 10,000 feet. Facility costs improved approximately 25% quarter over quarter and 30% year over year. $544 1Q16 Avg. Drilling Cost / Ft $154 1Q16 16% Reduction Avg. Completion Cost / Ft 17% Reduction $129 $452 Recent Record $88/Ft Recent Record $367/Ft Oil Rate Avg. Gross DC&E Costs (MM) $15 $10 $5 $0 $11.7 Operated Rigs $7.6 $5.6 $ Projected Pad Drilling Avg. Gross DC&E ($MM) Wells Spud Wells Turned In Line 8,000 6,000 4,000 2,000 0 Lateral Lengths Average Lateral Lentgths Operated Rigs Wells Spud O V E R P R E S S U R E D - Z O N E S 1Q16 Wells Turned In Line Flowback Strategies Restricted Flowback (APC Preferred) Time Unrestricted Flowback Enhancing Returns through Capital Efficiencies (4,500 SLE) Up 52% TOTAL THICKNESS 8,500 DELINEATING THE STACK * Assumes 4,500 SLE Achieved 24 Hour IPs * : AVALON A & B 1,450 BOE/d 2 ND BONE SPRING 2,050 BOE/d UPPER WOLFCAMP 4,000 BOE/d LOWER WOLFCAMP Testing Potential per Section Development 7

8 GULF OF MEXICO During the 2 nd quarter, Anadarko s Gulf of Mexico region averaged sales volumes of approximately 74,000 BOE/d. Oil volumes were 56,000 BOPD. Oil volumes from operated facilities increased 7% from 2 nd quarter of 2015 with Lucius and Caesar/Tonga reaching record production levels. K2 reached an eight-year-high production rate during the quarter. Anadarko currently has up to 30 identified development low-cost tieback opportunities in the Gulf, delivering short-cycle oil volumes. The company s track record of exploration success could provide additional inventory in the future. S A L E S V O L U M E S * 2Q15 2Q15 2Q15 2Q15 Oil NGLs Gas Oil NGLs Gas MBOE/d MBOPD MBbl/d MMcf/d MBOPD MBbl/d MMcf/d MBOE/d Operated K2 Complex Total *Includes the impact of weather-related downtime CONSTITUTION Warrior TIEBACK OPPORTUNITIES* CAESAR/TONGA K2 HEIDELBERG LUCIUS * As of 1/1/2016 INVENTORY* 5-8 WELLS 4-7 WELLS + 2 Potential New Fields 3-6 WELLS + 2 Potential New Fields 3-7 WELLS + 1 Potential New Field + Third-Party Developments Lucius Phobos Shenandoah Yucatan LUCIUS Caesar/Tonga Coronado MARCO POLO HEIDELBERG Heidelberg Yeti GULF OF MEXICO APC WI Block New Exploration Prospects APC Discoveries Appraisal Drilling Exploration Drilling 0 30 MILES 8

9 GULF OF MEXICO Development LUCIUS: KEATHLEY CANYON 874/875/918/919 (APC WI 23.8%) The Lucius field continues to surpass expectations realized through favorable connectivity, strong aquifer support and outstanding well deliverability. The seventh Lucius development well was drilled in the 2 nd quarter encountering approximately 475 net feet TVT of high-quality oil pay. Initial flowback data indicates rates in excess of 15,000 BOPD. HEIDELBERG: GREEN CANYON 859/860/903/904/948 (APC WI 31.5%) The fourth Heidelberg well spud during the 2 nd quarter encountering nearly 185 net feet TVT of oil pay in high-quality sands. In addition, the fifth Heidelberg well spud in July, and both wells are anticipated to produce between 8,000 and 12,000 BOE/d. CAESAR/TONGA: GREEN CANYON 683/726/727/770 (APC WI 33.75%) The seventh Caesar/Tonga development well encountered more than 500 net feet TVT of pay and began producing in the 2 nd quarter. It is currently producing in excess of 9,000 BOE/d and still ramping. The field reached record production of 55,000 BOPD in the 2 nd quarter. Exploration/Appraisal SHENANDOAH: WALKER RIDGE 51/52/53 (APC WI 33%) The Shenandoah-5 appraisal well encountered more than 1,040 net feet TVT of pay extending the resource in the central-to-eastern limits of the field. The plan is to run a production liner and secure the well for future production operations. The Shendandoah-6 appraisal well will spud before year end. The well is expected to establish the oil-water contact on the eastern flank of the field and quantify the full resource potential. Anadarko increased its working interest in Shenandoah to 33% and added several new exploration prospects to the portfolio by participating in a preferential-right process. WARRIOR: GREEN CANYON 518/519/563 (APC WI 65%) Following drilling operations at Shenandoah, the Warrior prospect will spud, targeting Miocene sands equivalent in age to the nearby K2 field. K2: GREEN CANYON 518/561/562/605/606 (APC WI 42%) The GC 561 #3 well was completed in the 2 nd quarter and is producing in excess of 7,000 BOPD. Field production hit an eight-year record high, producing in excess of 28,000 BOPD. Constitution Spar, Gulf of Mexico 9

10 INTERNATIONAL & FRONTIER During the 2 nd quarter, the International & Frontier region liquids sales volumes averaged 86,000 Bbl/d. In Ghana, first oil from the TEN development is expected in the 3 rd quarter of At the Jubilee development, the partnership determined the optimal long-term solution to the turret issue is to convert the FPSO to a permanently moored facility. In Mozambique, Anadarko and ENI have jointly submitted the Resettlement Plan to the government, a key milestone for the project. S A L E S V O L U M E S 2Q15 CAPITAL INVESTMENTS MBbl/d MBbl/d $MM Alask a 12 9 Algeria* Ghana/W. Africa* Mozambique - - Other - - Total Alask a 19 Algeria 13 Ghana/W. Africa 107 Mozambique 12 Other 5 Total 156 El Merk, Algeria * Quarterly sales volumes are influenced by size, timing and scheduling of tanker liftings. 10

11 INTERNATIONAL & FRONTIER Development Alaska: Due to strong performance at Alpine West, net production from the Colville River Unit averaged approximately 12,000 BOPD during the 2 nd quarter, representing a 14% increase over the prior quarter and a 38% increase year over year. Algeria: Gross production averaged approximately 360,000 BOE/d during the quarter, which was an increase of 6% from the prior quarter after planned maintenance and inspections at the Ourhoud facility were completed successfully. Ghana: Jubilee sales volumes were down approximately 8,500 Bbl/d from the prior quarter due to planned maintenance downtime being extended beyond the 1 st quarter. Following maintenance on the FPSO and implementation of new production and offtake procedures, production has ramped back up and is expected to average approximately 85,000 BOPD during the second half of the year. The partnership has determined a long-term solution to convert the FPSO to a permanently moored facility and is expecting the work program to be complete in the 1 st half of In the meantime, dynamically positioned shuttle tankers continue to successfully conduct offtakes. The TEN development was approximately 97% complete at the end of the 2 nd quarter. Eight of the 10 first-oil wells have been completed and the 80,000-BOPD project remains on schedule for first oil in the 3 rd quarter of Mozambique: OFFSHORE AREA 1 (APC WI 26.5%, OPERATOR) The Resettlement Plan was jointly submitted by Anadarko and ENI to the Government of Mozambique for approval. This marks a critical step on the path to project delivery. The partnership continues to work with the Government to progress the agreements and approvals required to support the investment. TEN FPSO, Ghana 11

12 INTERNATIONAL & FRONTIER Exploration/Appraisal COLOMBIA: BLOCKS FUERTE NORTE, FUERTE SUR, PURPLE ANGEL, COL 5, AND URA 4 (APC 50% WI, OPERATOR) An exploration well is planned for the 2 nd half of 2016 on the Purple Angel block. The well is designed to test objectives similar to those at the Kronos discovery. BLOCKS COL 1, COL 2, COL 6 AND COL 7 (APC WI 100%, OPERATOR) Acquisition of Phase II of the Esmeralda 3D survey, 13,000 km 2, is approximately 75% complete. Phase II acquisition is anticipated to finish during the 3 rd quarter. COLOMBIA Gross Acres: ~16MM CÔTE D IVOIRE: BLOCK CI-103 (APC WI 65%, OPERATOR) Following the success of the Paon-5A horizontal well, the company successfully drilled its second deepwater horizontal well at the Paon-3AR sidetrack encountering approximately 120 net feet TVT of pay. The rig is currently on location at the Paon-5A preparing to perform a drillstem and interference testing program. The data from these operations are expected to provide insight on reservoir connectivity, deliverability and fluid properties. BLOCKS CI-527 (PELICAN), CI-528 (ROSSIGNOL) (APC WI 90%, OPERATOR) A two-well exploration campaign is planned to commence in the 3 rd quarter after the completion of the Paon appraisal program. Located to the southeast of Paon, the Rossignol and Pelican prospects will target similar-aged sands along trend to the Paon discovery. CÔTE D IVOIRE Gross Acres: ~1MM SOUTH AMERICA AFRICA GRAND COL Paon-1X Paon-5A CI % WI COL 5 Purple Angel Block FUERTE NORTE FUERTE SUR GRAND FUERTE COLOMBIA APC WI Block APC Discovery Planned Drilling Successful Well Oil Field Gas Field Prospects/Leads CÔTE D IVOIRE Paon-3AR Rossignol-1X Paon-4A 10 MILES 16 KMS CI % WI Pelican-1X URA 4 Kronos-1 CI % WI 50 MILES 80 KMS CI % WI 12

13 DEEPWATER RIG SCHEDULE Noble Bob Douglas Bolette Dolphin Rowan Resolute Ocean BlackHawk Ocean BlackHornet Ocean BlackHornet Drillship Bolette Dolphin Drillship 13

14 GLOSSARY OF ABBREVIATIONS APC: Anadarko Petroleum Corporation MBbl/d: Thousand Barrels per Day Avg.: Average MBOE/d: Thousand Barrels of Oil Equivalent per Day Bbl/d: Barrels of Liquids per Day MBOE: Thousand Barrels of Oil Equivalent BOE: Barrels of Oil Equivalent MBOPD: Thousand Barrels of Oil per Day BOE/d: Barrels of Oil Equivalent per Day MM: Million BOPD: Barrels of Oil per Day MMcf/d: Million Cubic Feet per Day CBM: Coalbed Methane NGL: Natural Gas Liquid DC&E: Drilling, Completion, and Equipment NPV: Net Present Value EOR: Enhanced Oil Recovery QoQ: Quarter over Quarter EUR: Estimated Ultimate Recovery SLE: Short Lateral Equivalent FPSO: Floating, Production, Storage and Offloading Unit TEN: Tweneboa, Enyenra and Ntomme Ft: Foot TVT: True Vertical Thickness HZ: Horizontal WES: Western Gas Partners, LP (NYSE: WES) IP: Initial Production WI: Working Interest KM: Kilometers LNG: Liquid Natural Gas LOE: Lease Operating Expense 14