Anadarko looks to $60 oil next year

The recovery will be driven more by demand than by supply constraints

Anadarko Petroleum Corp expects higher oil prices next year will allow it to spend more money on oil and natural gas exploration.

The driller said crude prices are likely to be sustained around $60 (Dh220) a barrel in 2017, and the recovery will be driven more by demand than by supply constraints. If prices rise, the company may allocate more capital toward the DJ basin in eastern Colorado and Delaware basin in West Texas, management said on a conference call to discuss secondquarter earnings. The additional spending would be funded by asset sales, which the company said the market should continue to be “receptive” to.

“The more we feel comfortable about that sustained $60 price environment, the more likely you will see us increase capital,” Chief Executive Officer Al Walker said during the call.

Raise cash

Anadarko, like its peers, has sought to slash spending and raise cash to cope with a twoyear slump in oil. The producer said it has closed $2.5 billion in asset sales so far this year and is targeting $3.5 billion for all of 2016. It’s in the process of selling properties in Wyoming, East Texas and Louisiana, people with knowledge of the matter said in May.

The second-quarter loss was $692 million, or $1.36 per share, compared with a profit of $61 million, or 12 cents, a year earlier, the Woodlands, Texas-based company said in a statement. Excluding one-time items, the per-share loss was 60 cents, better than the 79-cent average of 32 analysts’ estimates compiled by Bloomberg.

Shares rose to $56.09 at 9:43am in New York before erasing gains as crude prices dropped to a three-month low on an unexpected increase in stockpiles. Anadarko fell as much as 2.9 per cent to $53.18. Western Gas Partners LP, a master limited partnership 40 per cent owned by Anadarko that gathers and transports natural gas, rose as much as 5.8 per cent to $52.35 after earnings beat analyst estimates.

Anadarko may end the year with 170 drilled but uncompleted wells, or DUCs, in the US as it works down its backlog, Bloomberg Intelligence analyst Vincent Piazza said Monday in a note.

The number of dormant crude and natural gas wells in the country, at 4,230 as of April 1, is set to shrink dramatically in the largest plays if prices hold steady as producers resume completion, Bloomberg Intelligence analyst Andrew Cosgrove said last week.