APC’s Delaware Basin operations
According to Anadarko Petroleum (APC), the company’s Delaware Basin position is three times the size of its contiguous core DJ Basin footprint and holds 8,500 feet of stacked oil potential.
Also according to APC, barring the Delaware Basin, all of its other assets generate free cash flow at $50 crude oil prices (USO). However, the company went on to say that it expects its Delaware Basin operations to achieve the same success within a few years as it completes its infrastructure build-out and takeaway capacity.
According to APC management, in 2017, Anadarko made significant progress on the extensive infrastructure backbone it’s planning to build in the Delaware. It expects production from the region to ramp-up in the second half of 2018.
Secured basin takeaway
In the first quarter-earnings conference, Anadarko management commented that the company had secured future takeaway “ahead of the rapid pace of development.”
These include access to long-term crude oil transportation capacity to both the Gulf Coast refining and US export markets as one of the anchors on Enterprise Product Partners’ (EPD) Midland pipeline to Houston and Plains All American Pipeline’s (PAA) Cactus II pipeline to Corpus Christi. APC also locked in firm sales commitments out of the basin for about 80% of its operated natural gas production.
In the first-quarter earnings release, Robert Walker, APC’s CEO commented, “Looking ahead, our infrastructure buildout in West Texas is on track, with expectations of placing into service our first regional oil treating facility (ROTF) in Reeves County in the second quarter.”
A second ROTF is expected to follow in the third quarter. Walker went on to add that as the operator for ~70% of its Delaware basin leasehold, the company can serve as an “anchor tenant on several pipeline projects to ensure hydrocarbon-takeaway from the basin and improve wellhead margins.”
Q1 2018 operational highlights
In the Delaware Basin, Anadarko reported production of 85 Mboe/d (thousand barrels of oil equivalent per day), similar to the first quarter of 2017’s levels. However, the company achieved record oil sales volumes of 52,000 Boe/d, up 70% from the first of quarter 2017. APC operated an average of nine drilling rigs during the quarter.