Anadarko to make trims at D- J Basin

State’s top driller to cut costs, activity

Colorado’s largest oil and gas producer said Tuesday it will sharply reduce capital investments and drilling activity this year in the Denver- Julesburg Basin.

Anadarko Petroleum Corp. plans to run just one rig in the D- J Basin northeast of Denver, a sharp drop from the seven averaged last year. Overall, Anadarko will run five onshore drilling rigs this year compared with 25 last year.

Depressed oil prices, now in the low$ 30- a- barrel range, have made it uneconomical to drill. Anadarko plans to spend about $ 500 million this year in Weld County, down from $ 1.3 billion last year and $ 2.3 billion in 2014.

Of course, even that number is at risk should oil prices take another big tumble. At the start of 2015, Anadarko, based in a suburb of Houston, had budgeted $ 1.8 billion for the D- J Basin.

“Because of its importance to our company, we’re being very prudent and not drilling up the best opportunities in our portfolio in the current price environment. This will ensure we are well positioned to accelerate when the time is right,” Anadarko spokeswoman Robin Olsen said.

That is a shift in emphasis from last year, when the D- J Basin received greater attention because it had some of the lowest production costs compared with alternative areas.

Anadarko, which has about 1,500 workers in Colorado, has done its best to avoid layoffs. But company executives warned last month that employment will need to adjust given lower spending and activity.

Anadarko plans to cut its overall capital spending program in half, from $ 5.4 billion last year to around $ 2.7 billion this year. Investments in U. S. onshore operations will fall by nearly two- thirds, from $ 3.2 billion last year to $ 1.1 billion this

year.

The D- J Basin and the Delaware Basin, in west Texas and eastern New Mexico, are the two onshore areas that Anadarko is concentrating on domestically.

Each receive $ 500million in the capital spending budget for 2016. But the Delaware will get four drilling rigs, while the D- J will keep one.

Anadarko said it plans to sell $ 3 billion in assets this year, including $ 1.3 billion in sales already arranged, and that it will free up another $ 450 million in savings by cutting its dividend.

The company also has left itself some wiggle room should oil prices unexpectedly rebound. The company has 230 drilled but uncompleted onshore wells that it can activate once the economics allow.