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Anadarko Could Double By 2014

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Investment Underground

by Laura McPherson

Anadarko (NYSE:APC) recently announced that its operations in the Niobrara made another possible discovery below a former bombing range in Arapahoe County, Colorado. First production was reported at 200 boe per day, though this trailed to 127 boe per day after the first 90 days of production. Anadarko Director of External Communications John Christiansen indicated the company will be drilling more test wells to obtain an estimate of the potential oil and gas reserves in the area.

Some are crediting EOG Resources (EOG) with inaugurating the Niobrara, in late 2009, and now Anadarko and competitor Noble Energy (NBL) are both bullish on the play. Total reserves in the area are unknown, but Anadarko is indicating it will spend $1 billion a year developing and extracting from the area. Already the company is producing an average of 80,100 boe per day from its Niobrara and Codell acreage, and has seven horizontal rigs operating with plans for three more to be added this year. For its part, Noble expects to invest $1.2 billion this year on its Niobrara exploration and production. Ted Brown, Senior Vice President, Northern Region for Noble, recently indicated the company will continue to spend between $1 and $1.5 billion a year on the Wattenberg specifically.

Earlier this month Anadarko divested its working interests in the deepwater Gulf of Mexico Pompano field to Stone Energy (SGY) in a deal valued around $67 million. Net production transferred is estimated at 1,000 boe and 3 mcf per day. Stone already owns working interest in the Pompano field, so this deal adds to its existing footprint in the area. This is not a major deal for Anadarko, but I believe that the decision to divest was made to free further resources for the Niobrara and other on-shore plays. This shores

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