INTERVIEW-Anadarko to focus on development
By Andrew Kelly
HOUSTON, Jan 29 (Reuters) - Anadarko Petroleum Corp. (NYSE:APC - news) will slash its capital
spending in 1999 and emphasize development of recent big oil and gas finds rather than the search for new
reserves, Chief Executive Officer Robert Allison said on Friday.
''These are tough times and we'd be silly to keep spending at high rates in difficult times,'' Allison told Reuters.
Earlier on Friday the Houston-based oil and gas producer set a 1999 capital spending budget of $410 million, compared with actual 1998 capital
spending of $917 million.
Allison said that with oil and gas prices stuck at low levels, Anadarko was putting some projects on hold and pushing ahead with those that would
have the greatest long-term impact on boosting production and profits over the long term.
''Our people recommended projects that are all economic at today's prices totaling somewhere close to $1 billion. We said: No, we're going to pull in
our horns a little bit.''
Allison said top priority would be given to developing the large Tanzanite and Hickory fields discovered beneath salt structures in the Gulf of Mexico
last year and to boosting oil production in Algeria and in the Alpine field in Alaska.
Projects in areas such as western Kansas, central Oklahoma, western Texas and the Texas panhandle would be put on the back burner for the time
being, he said in a telephone interview.
''They're not lost opportunities. When prices get better, we'll be back doing them,'' he said.
Allison said Anadarko's capital spending in 1999 and 1998 was not a straight ''apples with apples'' comparison.
Capital spending was exceptionally high last year, he said, and the 1999 figure does not include $150 million in project financing to develop Tanzanite
and Hickory.
Earlier this week Anadarko said its production grew seven percent to 47.2 million barrels of oil equivalent (boe) last year. Year-end reserves grew by
32 percent to 935.1 million boe, due in large part to the new discoveries in the Gulf of Mexico.
The company posted a net loss for the year of $49.3 million, compared with net income of $107.3 million in 1997, due to a 36 percent drop in oil
prices and a 17 percent fall in gas prices.
Allison said because of persistent price weakness Anadarko had cut back on some domestic land-based drilling projects and now expected oil and gas
output to grow by about five percent in 1999, compared with a forecast of eight percent last October.
Anadarko still expected big increases in its production in 2001 and 2002 as the projects in the Gulf of Mexico, Algeria and Alaska really started to kick
in, he said.
In October Anadarko projected production of 77 million boe in 2001 and 92 million in 2002. Allison said the company still expected to meet those
projections.
Allison said he was bullish on oil and gas prices for the long term, adding that current oil prices were hurting all OPEC members and that the current
low number of active drilling rigs in the U.S. would soon lead to a fall in gas production.
''I think you're going to see much stronger gas prices next winter and I wouldn't be at all surprised to see much stronger oil prices,'' he said.
Because of the uncertain outlook for oil and gas prices, Allison said he was unable to give a meaningful indication of the company's earnings in 1999.
''We can't estimate what prices are going to be. If they stay at today's levels we'll show a loss like everybody else in the business. I don't think they
will, but I hate to forecast or predict what will happen,'' he said. |
