SECOND-QUARTER OPERATIONS REPORT JULY 24, 2017

Transcription

1 A N A D A R K O P E T R O LAENUAM D ACROK RO P POERT AR TO ILOE NU M C O R P O R A T I O N INVESTOR RELATIONS ROBIN FIELDER Vice President ANDY TAYLOR Director PETE ZAGRZECKI Director NYSE: APC SECOND-QUARTER OPERATIONS REPORT JULY 24, nd Quarter 2017 Highlights 2 Overview 3 U.S. Onshore 4 Delaware Basin 5 DJ Basin 7 Gulf of Mexico 9 International & Frontier 11 Deepwater Rig Schedule 13 Divestiture Volume Summary 14 Glossary of Abbreviations 15

2 2017 SECOND-QUARTER HIGHLIGHTS Executing the Strategy Anadarko remains committed to its disciplined strategy focused on developing its extensive highmargin oil portfolio as well as expanding its future LNG project in Mozambique and creating option value through exploration. In the 2 nd half of the year, the company will attempt to pace upstream spending to expected returns and cash flow, while using its strong cash position to invest in midstream and other opportunities. In the U.S. onshore, Anadarko is building long-term value in the Delaware Basin through its material infrastructure buildout and operatorship capture program. The horizontal development of the DJ Basin remains on track. Importantly, Anadarko expects to reach the 150,000 BOPD exit rate from Delaware and DJ basins as laid out in the March Investor Conference, even with the production impacts from the company s response efforts in Colorado. Anadarko s industry-leading position in the Gulf of Mexico continues to deliver both outstanding well results from existing fields and exploration and appraisal success on near-infrastructure prospects. Investing in Future Oil Growth Anadarko achieved record oil volumes in the Delaware Basin, averaging 33,000 BOPD during the quarter. The operatorship capture initiative progressed with the company successfully securing the path for 70% operatorship in the shared acreage with Shell. The expansion of the oil-gathering and water-disposal system advanced during the quarter with the commissioning of an additional 20 MBOPD at the Avalon oil processing facility in Loving County. Realizing Further Enhancements The DJ Basin continues to refine its completion recipe and improve efficiencies. Anadarko has been testing a new completion design for several months utilizing more fluid and tighter stage spacing. This has resulted in a 35% uplift compared to early performance. Leveraging Deepwater Facilities Anadarko continues to utilize its industry-leading infrastructure for both development and exploration opportunities. During the quarter, wells were brought on line at Horn Mountain and K2. Additionally, Anadarko drilled a successful appraisal well at Warrior, a near-infrastructure discovery expected to be tied back to the company-operated Marco Polo platform. In the most recent Gulf of Mexico Lease Sale, Anadarko was awarded 11 leases, most of which were near existing operated facilities. Successful Divestitures The company closed on the previously announced divestiture of the Eaglebine asset for $534 million during the quarter. Additionally, the company closed the sale of coalbed methane assets in Utah for $70 million. Year to date, Anadarko has received nearly $3.5 billion in divestiture proceeds, which have bolstered the cash position of $6 billion at quarter end. This substantial cash balance enables flexibility in managing through the lower commodity-price environment. DJ Basin, Colorado CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of While Anadarko believes that its expectations are based on reasonable assumptions as and when made, no assurance can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this presentation, including Anadarko's ability to realize its expectations regarding performance; execute upon its capital program and meet financial and operating guidance, including the impact of response efforts in Colorado; meet the long-term goals identified in this report; timely complete and commercially operate the projects, infrastructure, and drilling prospects identified in this presentation; successfully drill, complete, test and produce the wells identified in this report; finalize the necessary steps to secure operatorship; and successfully plan, secure additional gvernment approvals, enter into long-term sales contracts, finance, build, and operate the necessary infrastructure and LNG park in Mozambique. Other factors that could impact any forward-looking statements are described in "Risk Factors" in the company's 2016 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings and press releases. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements. 2

3 OVERVIEW Sales Volumes Sales volumes for the quarter were 57 MMBOE, or 631,000 BOE/d. Divestitureadjusted sales volumes were 621,000 BOE/d, an approximately 12% increase over last year. Oil sales volumes, on a divestiture-adjusted basis, were 331,000 BOPD. As a result of the recent divestitures of the Eaglebine and Utah CBM assets, as well as the impact from the company s response efforts in Colorado, Anadarko is reducing full-year sales-volume guidance by 4 MMBOE to a range of 231 to 235 MMBOE. Capital Investments Second-quarter capital investments of $1,059 million, excluding $151 million of capital investments made by WES, were near the low end of guidance. Full-year capital guidance, excluding WES, has been reduced by $300 million to a range of $4,200 million to $4,400 million. SALES VOLUME (MMBOE) Initial Guidance Divestitures ~2 Eaglebine/West Chalk & Utah CBM Colorado Response Impact ~2 New Guidance SALES VOLUMES CAPITAL INVESTMENTS 2Q17 2Q17 2Q17 2Q17 2Q16 2Q16 2Q16 2Q16 Oil NGLs Gas Oil NGLs Gas MBOPD MBbl/d MMcf/d MMBOE MBOPD MBbl/d MMcf/d MMBOE Lower , , Gulf of Mexico Alaska Total U.S , , International* Divestiture-Adjusted Sales , , Divestitures** Total Company , , * Quarterly sales volumes are influenced by size, timing and scheduling of tanker liftings. ** East Chalk and Wamsutter divestitures closed in 2Q16; Elm Grove, Hearne, and Ozona divestitures closed in 3Q16; Carthage and Hugoton divestitures closed in 4Q16; Eagleford and the majority of the Marcellus divestiture closed in 1Q17. 2Q17 $MM Lower Gulf of Mexico 308 Alaska 27 Total U.S. 864 International 64 Midstream* 253 Capitalized Items/Other 29 Total Company 1,210 *Includes WES capital investments of $151 MM. 3

4 U.S. ONSHORE DJ BASIN Anadarko s U.S. onshore assets delivered sales volumes of 377,000 BOE/d on a divestiture-adjusted basis, a decrease of 6% from the 1 st quarter, largely driven by the impact of response efforts in the DJ Basin. The company currently has 22 rigs drilling in two of the most prolific basins in the U.S. onshore the Delaware Basin (16 rigs) and the DJ Basin (6 rigs). Anadarko closed the previously announced divestiture of the Eaglebine assets. Additionally, the company divested of its gas-focused CBM properties in Utah. DELAWARE BASIN 2017 Focus Areas Base Assets SALES VOLUMES 2Q17 2Q17 2Q17 2Q17 2Q16 2Q16 2Q16 2Q16 Oil NGLs Gas Oil NGLs Gas MBOE/d MBOPD MBbl/d MMcf/d MBOPD MBbl/d MMcf/d MBOE/d DJ Basin Delaware Basin Greater Natural Buttes W. Chalk/Eaglebine Other Divestiture-Adjusted Sales , , Divestitures* Total , , CAPITAL INVESTMENTS 2Q17 $MM DJ Basin 227 Delaware Basin 234 Other 68 Total 529 * East Chalk and Wamsutter divestitures closed in 2Q16; Elm Grove, Hearne, and Ozona divestitures closed in 3Q16; Carthage and Hugoton divestitures closed in 4Q16; Eagleford and the majority of the Marcellus divestiture closed in 1Q17. 4

5 Increasing Activity and Oil Volumes The company added two rigs during the quarter, exiting the quarter with 16 operated rigs drilling in the basin. One completions crew was added, exiting the quarter with six operated completions crews. Total sales volumes for the quarter averaged 57,000 BOE/d, with oil volume averaging 33,000 BOPD. These oil volumes represent 8% growth over the prior quarter and 52% growth from the 2 nd quarter of Preparing for a Scalable Development The company is performing formation targeting and completions tests in numerous wells on a multi-pad development in northern Loving County. Initial results are encouraging, with two Wolfcamp A wells each delivering more than 3,400 BOE/d* (70%+ oil). These two wells are located near existing operated infrastructure. Anadarko continues to seek opportunities to core up its position to improve capital efficiencies. During the quarter, the company completed land trades with various basin operators for more than 11,000 acres, which has added about 37 sections worth of extended-lateral opportunities. Those acres, combined with other swaps completed prior to 2 nd quarter, bring the total to more than 28,000 acres. The company continues to secure takeaway, having recently reached an agreement to be an anchor shipper on a gas-residue line from the Ramsey and Mentone plants to the Waha hub. A N A D A R K O P E T R O L E U M C O R P O R A T I O N DELAWARE BASIN Securing Operatorship Prior to the conclusion of the participation agreement with Shell on July 12, Anadarko completed all of the well proposals required to advance toward securing operatorship on approximately 70% of its JV acreage. Additionally, joint-operating agreements have been established in all areas where operatorship has been defined. NEW MEXICO TEXAS Culberson Average Operated Rigs 2Q17 ACTIVITY Wells Spud Wells Turned to Sales NEW MEXICO DELAWARE BASIN Loving TEXAS Winkler Reeves Ward *Maximum flowback initial production Delaware Basin, Texas APC Expected Operatorship Shell Expected Operatorship 10 MILES 5

6 DELAWARE BASIN Infrastructure Build Out A significant effort is underway to build out the infrastructure backbone in the Delaware Basin. Anadarko views company-owned infrastructure as a significant competitive advantage and driver of long-term value creation. FUTURE OIL INFRASTRUCTURE GROWTH NEW MEXICO TEXAS Transferring Success Anadarko is leveraging lessons learned from the development of the DJ Basin in the planning and development of the Delaware Basin. With operatorship clarity and planned infrastructure buildout in the Delaware Basin, Anadarko expects to be in a position to deliver significant volume growth in 2018 and beyond. In the early years of development in the DJ Basin, Anadarko invested heavily in midstream infrastructure and was able to carry out strategic acreage swaps that enhanced development efficiencies. CULBERSON FUTURE ADDITIONS by mid-2018 ~250 miles Pipelines ~180 MBOPD Oil Treating CULBERSON FUTURE ADDITIONS by mid-2018 ~230 miles Pipelines REEVES 10 MILES REEVES LOVING LOVING WINKLER WARD FUTURE WATER INFRASTRUCTURE GROWTH NEW MEXICO TEXAS WINKLER WARD DJ Basin 100,000 BOE/D Volume increase in less than 2 years Acreage trade with Noble Q1'11 Q1'12 Q1'13 Q1'14 Q1'15 Delaware Basin Operatorship capture and multiple acreage trades Lancaster plant in service Significant midstream buildout in 2017 & 2018 ~690 MBW/d Disposal Capacity 10 MILES - Q1'14 Q1'15 Q1'16 Q1'17 Q1'18E 6

7 Ongoing Development The company averaged six operated rigs drilling in the basin. One frac crew was added, exiting the quarter with four operated completions crews. Total sales volumes for the quarter averaged 226,000 BOE/d, with oil volume averaging 76,000 BOPD, reflecting the temporary impacts associated with the state s NTO and additional response efforts. New Completion Design Yields Early Success Early results indicate cumulative BOE production gains of more than 35% compared to core type curve updated in March. Implementation and testing continues as we evaluate impact to projected EUR. A N A D A R K O P E T R O L E U M C O R P O R A T I O N DJ BASIN Continued Efficiency Focus Average Operated Rigs 2Q17 ACTIVITY Wells Spud Wells Turned to Sales The company continues to focus on efficiencies. In the 2 nd quarter, Anadarko established record cycle times for mid- and long-length laterals of 4.1 and 4.7 days, respectively. FOCUS ON SUSTAINABLE DEVELOPMENT CENTRALIZED OIL STABILIZATION FACILITY (COSF) Stabilizes field oil received from oil gathering system, eliminating the need for stabilization equipment at well sites New DJ Basin Completion Design OIL CO 2 Eliminates truck traffic from oil hauling Fugitive emissions risk mitigated by reduced tank batteries and vapor recovery unit usage on well locations Normalized BOE/d Lowers operating expenses Reduces footprint at the well pad Producing Days New Design Average Oil Core Type Curve COSF, Colorado 7

8 DJ BASIN COLORADO RESPONSE UPDATE Anadarko s Response Submitted documentation to the COGCC in compliance with the NTO Phase 1 and 2. Anadarko s Actions Produced documentation on 1,100 production facilities and 4,200 wells. Inspected all active flowlines and facility piping within 1,000 feet of a building unit. Pressure tested 4,000+ active flowlines, with 99.6% demonstrating good integrity. 2,400+ inactive steel flowlines have been disconnected, and plugged and abandoned, with a small number to be abandoned by July 31. For additional information, see our Colorado Response page at Lowering noise levels on completion operations in urban areas Eliminated 24 million truck miles since start-up Reducing long-term oil storage tanks on new developments Accessing more resources and minimizing surface impact Anadarko Going Further Colorado residents must feel safe in their own homes, and I want to be clear that we are committed to understanding all that we can about this tragedy as we work with each investigating agency until causes can be determined. Brad Holly Executive Vice President, U.S. Onshore Exploration & Production 3,600 one-inch return lines disconnected and plugged and abandoned 25-step comprehensive inspection on all vertical wells Funding the purchase of methane detection equipment for residents Funding the cleanup and upgrade of the Oak Meadows park Conducted town halls with neighborhoods and engaging with various municipalities, county and state officials and HOAs 8

9 GULF OF MEXICO Anadarko s Gulf of Mexico region averaged sales volumes of 140,000 BOE/d during the quarter, a decrease of 12% from the prior quarter. The reduction in volume was largely a result of planned maintenance and upgrades on multiple facilities during the quarter. During the most recent lease sale, Anadarko was awarded 11 leases, bringing our total to an industry-leading 332 blocks, enhancing the value and opportunity set associated with our leading infrastructure position. SALES VOLUMES * 2Q17 2Q17 2Q17 2Q17 2Q16 2Q16 2Q16 2Q16 Oil NGLs Gas Oil NGLs Gas MBOE/d MBOPD MBbl/d MMcf/d MBOE/d MBOPD MBbl/d MMcf/d Total * Includes the impact of weather-related downtime TEXAS LOUISIANA MARLIN RAM POWELL 10 Operated Facilities 330 WI Blocks HORN MOUNTAIN Most in Deepwater Gulf of Mexico Largest Deepwater Leaseholder BOOMVANG NANSEN GUNNISON HOLSTEIN CONSTITUTION Warrior Constellation K2 Complex HOOVER Shenandoah Caesar Tonga Calpurnia HEIDELBERG MARCO POLO Coronado ANADARKO ASSETS 30 MILES LUCIUS Phobos Acreage (330 WI Blocks) Recent Discovery 2017 Planned/Actual Drilling 9

10 GULF OF MEXICO DEVELOPMENT LUCIUS: Keathley Canyon 874/875/918/919 (APC WI 48.9%, Operator) The eighth producing well spud in May and encountered 217 feet of net oil pay in the primary objective Miocene sands and confirmed prospectivity in the Pliocene sands. First production is expected in the 3 rd quarter. K2: Green Canyon 518/561/562/606 (APC WI 41.8%, Operator) Field production reached a nine-year high for the fourth consecutive quarter. The GC 562 #6 well was brought on line in April, exceeding expectations with an initial production rate more than 9,000 BOE/d. CAESAR/TONGA: Green Canyon 683/726/727/770 (APC WI 33.75%, Operator) Planned maintenance was completed on the Constitution spar during the 2 nd quarter, in line with expectations. This effort was completed in 42 days and will help maintain future uptime, further enhance safety and facilitate the tieback of Constellation for first production in HORN MOUNTAIN: Mississippi Canyon 126/127 (APC WI 100%, Operator) The first development well of the Horn Mountain Deep discovery achieved spud to first production in an impressive 108 days, largely driven by our infrastructure advantage and project management expertise. The well commenced production in June and is currently producing 12,000 BOPD. A second well is currently scheduled to spud in the 3 rd quarter. The spar is currently producing at a seven-year high. KING: Mississippi Canyon 84/85/129 (APC WI 100%, Operator) The company plans to spud a new development well in the King field in the 3 rd quarter, with anticipated first production in early The well is expected to be tied back to the 100% company-operated Marlin platform. HOLSTEIN: Green Canyon 643/644/645/688 (APC WI 100%, Operator) The spar is located in a prolific area of the deepwater Gulf of Mexico with significant potential for additional production. Platform rig work to develop several identified opportunities is on schedule to commence in late CONSTELLATION: Green Canyon 583/626/627/628/670 (APC WI 33.3%, Operator) Drilling and completion of the first development well was completed in June The well encountered more than 120 feet of net oil pay. Cost savings of $30 million were realized due to excellent drilling and completion operations. First production is expected in 2018, and the well is scheduled to be tied back to the 100% Anadarko-owned Constitution spar. EXPLORATION/APPRAISAL PHOBOS: Sigsbee Escarpment 38/39/40/82/83/84 (APC WI 100%, Operator) The second Phobos appraisal well was spud in June and is currently drilling. The well is designed to test the downdip extent of the Wilcox-aged oil accumulation on the eastern side of the structure. Phobos is located approximately 12 miles south of the Anadarko-operated Lucius facility and is currently being evaluated as a potential tieback. WARRIOR: Green Canyon 518/519/563 (APC WI 70%, Operator) The partnership drilled a second successful appraisal well in the 2nd quarter. The Warrior discovery is located approximately 3 miles from the Anadarkooperated K2 field and is expected to be tied back to the Marco Polo production facility. 10

11 INTERNATIONAL & FRONTIER International and Frontier region sales volumes averaged 104,000 Bbl/d during the 2 nd quarter, an increase of 21% year over year. Anadarko s international assets in Algeria and Ghana continue to deliver stable, material cash flows with minimal capital investment. In Mozambique, the company is finalizing key elements of the legal and contractual framework and continued work to secure long-term off-take agreements and project financing for the LNG project. SALES VOLUMES 2Q17 2Q16 CAPITAL INVESTMENTS 2Q17 MBbl/d MBbl/d Alaska 27 Alaska Algeria* Ghana* Total * Quarterly sales volumes are influenced by size, timing and scheduling of tanker liftings. Algeria 6 Ghana/Cote d'ivoire 28 Mozambique 12 Colombia 18 Total 91 El Merk Facility, Algeria 11

12 INTERNATIONAL & FRONTIER DEVELOPMENT ALASKA: Gross production averaged more than 60,000 BOPD during the quarter. Construction at Lookout (Greater Moose's Tooth 1) continues to progress and remains on schedule for first production in late ALGERIA: Gross production averaged 358,000 BOE/d during the quarter. El Merk produced at rates of nearly 146,000 BOE/d. Statutory maintenance on the facility is currently scheduled for the 4 th quarter. EXPLORATION/APPRAISAL COTE D IVOIRE: Paon, Block CI-103 (APC 75% WI, Operator) The Paon-6A well finished drilling during the quarter and did not encounter hydrocarbons. The company and its partners are currently evaluating next steps for the project. Blocks CI-527/528/529 (APC 90% WI, Operator) The Colibri-1X well spud during June and recently finished drilling. The well encountered non-commercial quantities of hydrocarbons. GHANA: Production from the TEN development averaged approximately 45,000 BOPD for the quarter with rates regularly in excess of 50,000 BOPD. Further development is pending a final ITLOS decision on the border dispute, expected in September. Jubilee gross production averaged approximately 86,000 BOPD during the quarter and reached 200 MMBO cumulative oil production. Anadarko continues to work with partners on a permanent turret solution and submittal of the full field development plan. MOZAMBIQUE: Offshore Area 1 (APC WI 26.5%, Operator) During the quarter, progress was achieved with advancement of many key components of the legal and contractual framework for the LNG project in Mozambique. Based upon these project advances, Anadarko continues to make meaningful progress with long-term LNG buyers. TEN FPSO, Ghana 12

13 DEEPWATER RIG SCHEDULE Bolette Dolphin* Rowan Resolute Ocean BlackHawk Ocean BlackHornet *On July 1, 2017, Anadarko notified Dolphin Drilling of its intent to terminate the contract of the Bolette Dolphin effective Aug. 30, Ocean BlackHawk 13

14 DIVESTITURE VOLUMES 1Q16 2Q16 3Q16 4Q16 TY16 1Q17 2Q17 East Chalk Wamsutter Elm Grove Hearne Ozona Hugoton Carthage Marcellus Eagleford MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) W.Chalk/Eaglebine (closed 2Q17 ) Utah CBM (closed 2Q17) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD) MBOE/d Gas (MMcf/d) NGLs (MBbl/d) Oil (MBOPD)

15 GLOSSARY OF ABBREVIATIONS APC: Anadarko Petroleum Corporation API: American Petrloeum Institute Bbl/d: Barrels of Liquids per Day BOE: Barrels of Oil Equivalent BOE/d: Barrels of Oil Equivalent per Day BOPD: Barrels of Oil per Day CAGR: Compound Annual Growth Rate CBM: Coal-bed Methane COGCC: Colorado Oil and Gas Conservation Commission DJ: Denver-Julesberg EUR: Estimated Ultimate Recovery FPSO: Floating Production, Storage and Offloading Unit MBOE: Thousand Barrels of Oil Equivalent MBW/d: Thousand Barrels of Water per Day MBOPD: Thousand Barrels of Oil per Day MMBO: Million Barrels of Oil MMBOE: Million Barrels of Oil Equivalent MMcf/d: Million Cubic Feet per Day NTO: Notice to Operators NYSE: New York Stock Exchange TEN: Tweneboa, Enyenra and Ntomme TVT: True Vertical Thickness WES: Western Gas Partners, LP (NYSE: WES) WI: Working Interest HOA: Homeowners Association ITLOS: International Tribunal for the Law of the Sea KM: Kilometers JV: Joint Venture LNG: Liquefied Natural Gas MBbl/d: Thousand Barrels per Day MBOE/d: Thousand Barrels of Oil Equivalent per Day 15