Anadarko outlines 2019 shale plans, new dividend payments

By Luke Geiver | November 16, 2018

Anadarko Petroleum Corp. will spend billions across its shale acreage in Texas and Colorado in 2019. The plan for next year involves a capital budget spending range between $4.3 billion to $4.7 billion with roughly $1.4 billion going to Texas and the Delaware Basin and another $1.3 billion headed to Colorado and the DJ Basin.

Between the two shale plays, Anadarko will run 15 drilling rigs and 10 frack crews. The expansion of infrastructure in the Delaware including both oil gathering and treating facilities will help Anadarko transition to multi-well pad development there. Work in the DJ Basin will continue to focus on the Wattenberg field. And, Anadarko will continue to test the promise of Wyoming’s Powder River Basin with the completion of 10 to 15 horizontal wells meant to prove out the Turner formation in Converse County, Wyoming. In Q3, Anadarko was running 11 rigs and seven completion crews. The company also invested roughly $76 million in the Powder River. According to Anadarko, industry well results there are encouraging with initial production in excess of 2,000 boe/d and oil cuts greater than 80 percent.

The 2019 capital spend announcement comes at the same time Anadarko announced a higher dividend to shareholders and an increase in share repurchasing and debt reduction.

The board of directors has approved a plan to buy-back roughly $1 billion in shares while also increasing its dividend by 20 percent. The quarterly dividend increase will go up by $0.30 cents per share, a 500-percent increase during 2018.

“We believe our peer-leading ability to attractively grow oil volumes within cash flow in a $50 oil environment while delivering significant free cash flow above this break-even point, positions our company very well to execute on our expanded shareholder-return commitments in the near term and in a durable fashion well into the future,” said Al Walker, CEO of Anadarko.

In total, 70 percent of all capital spend by Anadarko in 2019 will be on U.S. onshore. The remainder of the budget will go towards Anadarko’s Deepwater Gulf of Mexico work ($500 million), international operations in Algeria and Ghana ($200 million), some onshore and offshore exploration ($250 million) and some for LNG work in Mozambique ($200 million).

Anadarko also announced the sale of its midstream assets in the Delaware Basin and DJ Basin. The proceeds of the sale to Western Gas Partners will net the E&P $2 billion in cash and shares in Western Gas.

Under the terms of the asset sale transaction, WES will acquire substantially all of Anadarko's remaining midstream assets, which are largely associated with Anadarko's two U.S. onshore oil plays in the Delaware and DJ basins. The acquired assets include DBM Oil Services (100-percent interest), APC Water Holdings (100-percent interest), the Bone Spring Gas Plant (50-percent non-operated interest), and the MiVida Gas Plant (50-percent non-operated interest) in the Delaware Basin of West Texas. In the DJ Basin of northeast Colorado, WES will acquire Anadarko's 100-percent interest in both the DJ Basin Oil System and the Wattenberg Plant. Additional Anadarko midstream assets to be acquired by WES include equity stakes in the Saddlehorn Pipeline (20-percent non-operated interest), the Panola Pipeline (15-percent non-operated interest), and the Wamsutter Pipeline (100-percent interest).