Anadarko’s production costs
In the DJ Basin, Anadarko Petroleum (APC) reduced its well costs from $4.4 million in 2014 to $3.7 million in 2015. This is expected to further decline to $2.4 million this year.
The company noted that the DJ Basin generates free cash flows every year, even when capital spending is high, as you can see in the graph below. APC noted that the DJ Basin is a “self-funding high growth asset in the right market environment.”
The company has also reduced well costs in the Delaware Basin, from $11.7 million in 2014 to $7.2 million in 2015. Costs are expected to decline further to $6.2 million in 2016.
APC also noted that it plans to reduce its US onshore rig count by 80% to five operating rigs from an average of 25 rigs in 2015. The company will focus on base production and its cost reduction efforts to improve efficiency.
In the DJ Basin, APC plans to operate just one rig compared to seven in 2015. In the Delaware Basin, APC plans to run four operated rigs compared to seven in 2015. These will be directed toward delineation and lease maintenance instead of development activities.
APC’s successful appraisal and delineation efforts in the Delaware Basin led to an increase in its net recoverable resource, from ~1 billion to ~2 billion barrels of oil equivalent.
Next, let’s take a look at Anadarko’s capex (capital expenditure) plans for 2016.