Anadarko’s operational efficiencies
Anadarko Petroleum (APC) reduced its well costs from $4.4 million in 2014 to $3.7 million in 2015 in the DJ Basin. These costs are expected to fall further to $2.4 million this year. Drilling costs per foot fell 30% compared to 2Q15.
APC noted that the DJ Basin generates free cash flows every year, even when capital spending is high. APC noted that the DJ Basin is a “self-funding high growth asset in the right market environment.”
APC also reduced well costs in the Delaware Basin from $11.7 million in 2014 to $7.2 million in 2015. Costs are expected to fall further to $6.2 million in 2016. In the DJ Basin, drilling costs per foot fell 16% compared to 2Q15.
Anadarko Petroleum noted that the free cash flow it would generate from its Gulf of Mexico operations following the acquisition of Freeport-McMoRan’s (FCX) Gulf of Mexico assets, would enable it to accelerate drilling activity in the Delaware and DJ basins. APC plans to add two rigs in each of these plays later this year to meet its objective of doubling production to at least 600 thousand barrels of oil equivalent per day (or Mboepd) by 2021 from the current 280 Mboepd.