Independent oil and gas producer
Anadarko Petroleum Corporation
(
APC
) has inked a contract with
Enterprise Products Partners L.P.
(
EPD
) and DCP Midstream, LLC for designing and building a natural gas
liquids ("NGL") pipeline, stretching from Denver-Julesburg Basin
("DJ Basin") in Weld County, Colorado to Skellytown, in Carson
County, Texas. The new Front Range Pipeline will span 435
miles.
The deal will enable the companies to generate roughly 150,000
barrels per day ("bpd") of natural gas initially and subsequently
scale up the production to almost 230,000 bpd.
Per the agreement, all the parties will enjoy a one-third
interest in the total production. Enterprise Products Partners will
take care of building and operating the pipeline processes. It is
expected to start its development activities from the fourth
quarter of 2013. This transaction will help the company to ensure
smooth NGL supply to end consumers.
Anadarko's 2012 capital expenditure is focused on active
exploration and production activities. The company's Capital
Expenditure Program of $6.6 - $6.9 billion allocates 20% of the
funds for this purpose, compared with $6.55 billion spent in
2011.
In the fourth quarter of 2011, Anadarko generated 75,000 bpd of
NGL. Now the company expects NGL production in the range of 74,000
- 77,000 bpd for the first quarter of 2012.
We view this deal as a positive catalyst for Anadarko's future
growth in its NGL portfolio. As a result of this contract, the
company will be able to provide uninterrupted NGL to the high
growth territories in the U.S. including the Gulf Coast, with the
help of a well-equipped pipeline network provider, Enterprise
Products Partners.
At the same time, Anadarko will also enjoy strong logistics
support from the Mid-America Pipeline system and the Texas Express
Pipeline. We believe this capital-intensive drilling program will
enable the company to strengthen and enhance its NGL portfolio.
The company currently has a Zacks #2 Rank, which translates into
a short-term Buy rating.
Based in The Woodlands, Texas, Anadarko Petroleum Corporation is
primarily engaged in the exploration, development, production,
gathering, processing and marketing of natural gas, crude oil,
condensate and natural gas liquids.
ANADARKO PETROL (
APC
): Free Stock Analysis Report
ENTERPRISE PROD (
EPD
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research