Anadarko Petroleum (APC, Financial) should benefit from the ramp up in production at the Lucius spar in the deepwater Gulf of Mexico. This has been designed to produce on an average rate of 80,000 barrels of oil per day. Anadarko has completed 85% of the work at this asset, and the company expects the spar hull to sail to location in the latter half of the year. Moreover, the company announced a non-operated Yeti prospects in Walker Ridge block 16 of late. It owns approximately 37.5% working interest at this discovery that should add value to its top line growth in the future.
Making smart moves
In addition, Anadarko's U.S. onshore activities continue to achieve strong operating results and deliver additional cost savings. These onshore activities have enhanced efficiencies for its assets substantially. It is seeing increase production at its Wattenberg field with reduced costs. This should assist the company to generate adequate revenue going forward. The company saw strong sales volume here that increased more than 85,000 BOE per day annually. This is about 20,000 BOE per day more than its sales volume for the December quarter. Moreover, Anadarko has drastically reduced its drilling and completion costs at this project. The drilling and completion costs dwindled about 15% to $3.4 million from $4.00 million per well in the year earlier quarter.
The lower service costs and improved economies of the fields highlight better days for Anadarko in the future. It is productively engaged with service providers that should further bring down its costs during the current quarter. Also, it has reduced its capital expenses and lowered its maintenance capital requirements for fiscal 2015. Moreover, the company is taking appropriate action to preserve value, maintain flexibility and deliver differentiating success that should return handsome value to its shareholders in the future.
More catalysts
Furthermore, the strong performance from new wells at its Eagle Ford shale continues to enhance its production. The company recorded more than 275,000 barrels of oil equivalent per day and reduced the well costs above 14% at this asset. The company expects this field to remain highly productive in the coming years.
Alongside, the company has recently completed the delineation activities. These activities should enable the company to establish a net resource estimation of above 1 billion barrels of oil equivalent per day in the play. Also, the company has identified more than 5,000 drilling locations at this field. The company expects these activities to help Anadarko to build strong foundation for the future growth.
Conclusion
Anadarko remains solid on the operational front. It has pretty solid asset that should drive its growth once prices for oil and natural gas shows signs of improvements. Also, its costs cutting plans and reduction in cycle times should lead to better bottom line performance going forward. The analysts expect its earnings to grow 129% by the end of next year. The company has a lot of rooms left for growth in the short as well as the long run. Its balance sheet carries total cash of $7.37 billion and has total debt of $16.31 billion. It has operating cash flow of $8.47 billion and levered free cash flow of $3.27 billion.
