Anadarko’s 2017 capex plan
On March 7, 2016, Anadarko Petroleum (APC) announced its 2017 capex program and guidance. The 2017 capital expenditure budget is $4.5 billion–$4.6 billion, a ~40% increase from its capex of $3.3 billion in 2016.
The $2.8 billion reported above does not include its $491 million of capital spending in Western Gas Partners (WES), Anadarko’s MLP.
Anadarko’s 2017 capex breakdown
As shown in the image above, the majority of Anadarko’s 2017 capex, ~80%, is allocated to its US onshore and Gulf of Mexico operations. Anadarko’s press release stated that “these investments provide the foundation for our increased five-year oil growth expectations of more than 15 percent on a compounded annual basis at current prices.”
Anadarko also noted that it would be flexible with its spending in the Delaware and DJ ( Denver-Julesburg) basins if it sees fit, to capture additional returns. The DJ and Delaware basins have been Anadarko’s key focus. In 2016, Anadarko divested several assets as part of this strategy. It closed asset monetizations of over $5 billion in 2016, well above its target of $4 billion. Recently, on January 12, 2017, Anadarko announced that it would be selling its Eagle Ford assets to Sanchez Energy (SN) and Blackstone Group. The company announced another asset divestment in the Marcellus Shale on December 21, 2016.
Deepwater exploration, Algeria, and Ghana
Anadarko also noted that its deepwater exploration could provide sustained oil (DBO) production and that its Algeria and Ghana assets are expected to generate significant free cash flow. Investments in its deepwater Gulf of Mexico, Algeria, and Ghana assets in 2017 are expected to be $1.1 billion.
In the Gulf of Mexico, Anadarko anticipates production from its recently acquired Freeport-McMoRan assets. Anadarko’s press release stated that “minimal capital investments are expected to be required in 2017 to maintain the steady, long-lived, high-margin oil production provided by the company’s strong cash-generating assets in Algeria and offshore Ghana.” To learn more about Anadarko’s 4Q16 performance, read Reviewing Anadarko’s 4Q16 Stock Performance and More.