Anadarko Venturing Again in GoM - Analyst Blog


Independent oil and gas producer Anadarko Petroleum Corporation ( APC ) has decided to develop the Lucius project, located in the Keathley Canyon area of the deepwater Gulf of Mexico, jointly with other partners. This marks a new beginning for the company in Gulf of Mexico after the devastating accident in Deepwater Horizon.

The Lucius field is expected to hold more than 300 million BOE (barrels of oil equivalent) in relatively shallow reservoirs, and the company can utilize its expertise to develop the field economically. This project will have a truss spar floating production facility, which will be capable enough to produce in excess of 80,000 barrels of oil per day and 450 million cubic feet of natural gas per day.

This project is being jointly developed by a group of companies. Anadarko has the major share of the pie with a 35% working interest, followed by Plains Exploration & Production Company ( PXP ) with a 23.3%, Exxon Mobil Corporation ( XOM ) with 15%, Apache Deepwater LLC, a subsidiary of Apache Corporation ( APA ) with 11.7%, Petrobras with 9.6% and Eni S.p.A ( E ) with a 5.4% ownership.

The likely profitability has brought the big giants together for the development of this Lucius project. Drilling operation is expected to begin from 2012 and commercial production from 2014.

The Lucius project fits into Anadarko's long-term focus of delivering a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources. This project has the potential to become the most profitable in Anadarko's portfolio and we believe it is a welcome change for the company after it had to eek out $4 billion to BP plc. ( BP ) that released all mutual claims regarding the Deepwater Horizon explosion.

This project can turn out to be a big revenue churner for the company in the near future. However, we believe the Macondo oil spill should be an eye opener for all drilling and exploration companies. Anadarko and its project partners should be overly cautious during the development phase of this project to avoid fatal mishaps.

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

Based in The Woodlands, Texas, Anadarko Petroleum is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and NGLs.

APACHE CORP ( APA ): Free Stock Analysis Report
ANADARKO PETROL ( APC ): Free Stock Analysis Report

BP PLC ( BP ): Free Stock Analysis Report
ENI SPA-ADR ( E ): Free Stock Analysis Report
PLAINS EXPL&PRD ( PXP ): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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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: APA , APC , BP , E , PXP

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