By Dow Jones Business News, March 19, 2013, 09:05:00 PM EDT
--Companies say the discovery is one of the largest in the Gulf of Mexico
--Shenendoah-2 well encountered 1,000 feet of high quality oil bearing reservoir
--Well highlights potential of Lower Tertiary region of Gulf
Anadarko Petroleum Corp. ( APC ) and four partner companies announced a major discovery in the deepwater Gulf of Mexico
Tuesday that they heralded as one of the largest in the Gulf.
The Shenandoah-2 appraisal well is a "potentially giant project," said Bob Daniels, Anadarko's senior vice president
for deepwater and international exploration. The well encountered more than 1,000 feet of oil-containing rock, dwarfing
other recent discoveries in the region.
The well, drilled down 31,405 feet below the ocean floor, under 5,800 feet of water, is the latest indication of the
promise held by the Lower Tertiary area of the Gulf. The remote region is thought of as a final frontier in the Gulf of
Mexico, and has become more appealing as oil and gas companies have ventured farther out and into deeper waters.
Discoveries such as the one announced Tuesday indicate that large investments companies are making there could pay off.
Brian Reinsborough, chief executive officer and president of Venari Resources, which has a 10% interest in the well,
said the size of the discovery and the quality of the reservoir bore out the company's theories about the area.
"We think it bodes very well for this trend" in the Lower Tertiary, Mr. Reinsborough said.
Anadarko is the operator of the well and has a 30% stake. ConocoPhillips ( COP ) also has a 30% interest in the well,
Cobalt International Energy LP ( CIE ) has a 20% stake, Marathon Oil Co. ( MRO ) has a 10% stake.
Mr. Daniels, of Anadarko, said in the news release the Shenendoah Basin could become "one of the most prolific new
areas in the deepwater Gulf of Mexico."
RBC Capital Markets analyst Scott Hanold said the discovery is the latest in a string of successes recently announced
in the Gulf and is indicative of the deliberate and targeted approach operators are taking there in the wake of the 2010
Deepwater Horizon disaster. Tuesday's announcement came amid a flurry of positive results from nearby wells, including
Cobalt's North Platte 1 exploratory well, which encountered 550 net feet of oil-bearing rock, exceeding expectations.
"Coming out of the Macondo disaster, operators have done a pretty good job of showing the potential in the Gulf," Mr.
Hanold said. Anadarko announced its first Shenendoah discovery in 2009.
Booming production in the Gulf has attracted renewed interest from companies and investors, and Tuesday's announcement
was heralded by companies looking to expand their footprint there. Venari was formed last year by a group of investment
firms led by Warburg Pincus, and is one of the first new entrants into the Gulf after a temporary moratorium on
deepwater drilling was lifted.
Cobalt, an exploration and production company active in the deepwater Gulf of Mexico as well as off the coasts of
Angola and Gabon, also has roots in private equity. The company was founded in 2005.
ConocoPhillips ( COP ) said it has doubled its deepwater acreage in the Gulf in the last two years, and said the
Shenendoah-2 discovery is "an important first step" in its plans to deepen its Gulf of Mexico portfolio.
Shares of Anadarko rose more than 2% in after market trading following the announcement, to $83.28. Shares of Cobalt
rose 4.3% after the market's close, and shares of ConocoPhillips gained 0.2%.
Write to Alison Sider at Alison.Sider@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.