Anadarko Petroleum will restart 3,000 wells

The Denver Post - - BUSINESS - By Aldo Svaldi

Anadarko Petroleum plans to re­ac­ti­vate the 3,000 ver­ti­cal wells it shut down in mid-April in Colorado fol­low­ing a fa­tal home ex­plo­sion in Fire­stone in the sec­ond half of the year.

“The hor­i­zon­tal shut-ins were all short-lived and they are pro­duc­ing again and as we eval­u­ate the ver­ti­cals, we’re bring­ing those back on through the back half of the year, and work­ing on safely and ef­fi­ciently restor­ing that pro­duc­tion,” Brad Holly, ex­ec­u­tive vice pres­i­dent of U.S. On­shore Ex­plo­ration & Pro­duc­tion at Anadarko, told an­a­lysts dur­ing a call Tues­day morn­ing.

Anadarko, based in The Wood­lands, Texas, re­ported a 12 per­cent in­crease in oil sales in the sec­ond quar­ter ver­sus the same pe­riod a year ago, driven in part by in­creased pro­duc­tion in the Delaware Basin in south­west Texas.

But the com­pany lost $415 mil­lion or 76 cents a share in the sec­ond quar­ter, which was much more than the 34 cents a share an­a­lysts had fore­cast. Lower oil prices dur­ing the quar­ter im­pacted the com­pany’s fi­nan­cials, as did the ex­tra costs and pro­duc­tion losses the com­pany in­curred in Colorado fol­low­ing the Fire­stone blast.

Gas es­caped from an Anadarko well through a sev­ered flow­line and sat­u­rated the ground around 6312

Twi­light Ave., caus­ing a blast that de­stroyed the home and killed two men and se­verely in­jured a woman. The gover­nor re­sponded with a state or­der re­quir­ing pro­duc­ers to in­spect and test all oil and gas lines within 1,000 feet of oc­cu­pied struc­tures.

Anadarko on July 1 said it had tested more than 4,000 ac­tive oil and gas lines and plugged an­other 2,400 in­ac­tive ones per the state or­der. It asked for an ad­di­tional month to wrap up the re­main­ing work.

Af­ter the blast, the com­pany said it would vol­un­tar­ily shut down its older ver­ti­cal wells out of “an abun­dance of cau­tion,” a move it es­ti­mated would cost it 13,000 net bar­rels of oil a day in pro­duc­tion.

That works out to about 2 per­cent of the com­pany’s av­er­age pro­duc­tion of 631,000 bar­rels a day.

“The safety in­ci­dents that hap­pened and what is go­ing on with reg­u­la­tions will weigh neg­a­tively, but not over the long term,” said Has­san El­to­rie, as­so­ciate di­rec­tor of equity re­search and IHS Markit, which is lo­cated near Hous­ton.

Anadarko ex­ec­u­tives said Tues­day that Colorado crews con­tinue to find ways to im­prove re­sults in the Den­ver-Jules­burg Basin. They are drilling hor­i­zon­tal lat­er­als in record time and new frack­ing de­signs have boosted pro­duc­tion by 35 per­cent.

Lower oil prices have also made the com­pany more cautious, re­flected in a $300 mil­lion cut from the $4.5 bil­lion to $4.7 bil­lion in cap­i­tal spend­ing the com­pany said it was aim­ing for in March. About $250 mil­lion of the re­duced spend­ing will come on the oil and gas pro­duc­tion side.

Anadarko is the largest oil and gas pro­ducer ac­tive in Colorado. The com­pany’s shares are down 34.4 per­cent this year, in­clud­ing a 25.3 per­cent de­cline since the Fire­stone blast. They rose 3.4 per­cent on Tues­day to close at $45.72.

RJ San­gosti, Den­ver Post file

Anadarko Petroleum shut down 3,000 wells in north­east­ern Colorado af­ter a fa­tal ex­plo­sion in Fire­stone.

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