Anadarko Hits NatGas in Mozambique - Analyst Blog

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Independent oil and gas producer Anadarko Petroleum Corporation ( APC ) has made another major natural gas discovery in Offshore Area 1 of Mozambique's Rovuma Basin. The Atum discovery well encountered more than 300 net feet (92 net meters) of natural gas play in two high-quality Oligocene fan systems.

The new discovery is located 10 miles (16.5 kilometers) northwest of Offshore Area 1. This well was drilled to a depth of 12,665 feet (3,860 meters) in 3,285 feet (1,000 meters) of water. This discovery is expected to add 10 to 30 trillion cubic feet ("Tcf") of recoverable resources over a period of time.

Anadarko operates Offshore Area 1 of Mozambique jointly with five other companies and has a working interest of 36.5%. The working interests of the other co-owners are as follows: Mitsui E&P Mozambique Area 1, Limited (20%), Empresa Nacional de Hidrocarbonetos, ep (15%), BPRL Ventures Mozambique B.V. (10%), Videocon Mozambique Rovuma 1 Limited (10%), and Cove Energy Mozambique Rovuma Offshore, Ltd. (8.5%). Now, the consortium is planning to start a four-well appraisal program at this complex.

Anadarko has been actively carrying out exploration activities in this region, particularly in Mozambique. In May 2011, Anadarko's Golfinho discovery well encountered more than 193 net feet (59 net meters) of natural gas play in two high-quality Oligocene fan systems. This discovery was located 20 miles (32 kilometers) to the northwest of the Prosperidade complex, with a potential to contribute 7 to 20 Tcf of recoverable resources over a period of time.

Now the company expects Offshore Area 1 of Mozambique to contribute total estimated recoverable natural gas resource of 30-60 Tcf. At the same time, the current total gas upside of the discovered reservoirs on the block will be 100 Tcf.

Anadarko has been operating in Mozambique for quite some time and achieved drilling success in Lagosta and Camarao. It is continuously improving its overall portfolio on the back of its drilling successes in Mozambique, Ivory Coast, Ghana and the Gulf of Mexico.

At present, global oil and gas companies are teaming up with local players to discover unexplored reserves in Asia and Africa. Anadarko has also joined this international bandwagon. In Africa, besides Mozambique, the company is expanding its operations at CI-103 Block in Cote d'Ivoire ("Ivory Coast"), Deepwater Tano and West Cape Three Points in Ghana, and Block SL-07B-11 in Sierra Leone. 

In the first quarter of 2012, Anadarko spent $385 million to continue with its aggressive exploration activities and invested a substantial amount to revamp its African operations. A few days ago, Anadarko's Paon-1X exploration well encountered more than 100 net feet (31 meters) of oil play in a Turonian-aged reservoir offshore Ivory Coast.

Over the years, there has been a surge in natural gas demand given its clean burning nature. We expect that power generation companies will use natural gas as fuel in place of coal. Also, newly-installed units are more likely to use natural gas as fuel, thus increasing its consumption.

Anadarko Petroleum Corporation currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

The Woodlands, Texas-based 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. The company competes with Atlas Resource Partners, L.P. ( ARP ).


 
ANADARKO PETROL (APC): Free Stock Analysis Report
 
(ARP): ETF Research Reports
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: APC , ARP

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