Anadarko Petroleum Earnings Call Insights: Powder River Basin Oil and Wolfcamp
Powder River Basin Oil
Subash Chandra – Jefferies LLC: Two questions. First on Powder River Basin oil, if you can – more color on what you are seeing there, is it largely conventional? Do you see some shale type repeatability? My follow-up certainly is on Tronox if we can get to it. Thanks.
Charles A. Meloy – SVP, Worldwide Operations: Subash this is Chuck Meloy. I was just going to respond to the Powder River Basin oil program. What we are seeing is some exciting exploration results as we move around and test two or three different prospect areas. The zones that we are playing are the Shannon and the Frontier and we are also looking, of course, at the Niobrara and Mowry in the Powder River Basin and this is result of about, I don’t know, 10 wells or so coming on line. And they looked really good. We are starting to see some good results. We’re putting the plans and development together for two of the areas, up in the Table Mountain and Mojave areas and those should be conducted next year. And so the early returns looked good. It’s good oil and real good cuts. We are getting good prices for it and our program is just getting kicked and gear. So, I think you’ll see some really good improvement in our drilling performance and the things look like they’ll have good economics.
Subash Chandra – Jefferies LLC: Could you talk to maybe the well cost, the repeatability, if you were to compare it. Obviously, it’s going to be different than Wattenberg or Eagleford, but for contrast say?
Charles A. Meloy – SVP, Worldwide Operations: Yeah. The well cost we’ve seen have been in the say $7 million to $9 million range and it’s little early yet to know the EURs, but the rates have been good. We don’t have – our interest position in these wells average in the order of 50%. So, and as they come on, they’ve been coming on at fairly strong rates in the order of 500 to 600 barrels a day, top of rates, and when I anticipate those are exploration wells. So, we have to build roads and power and all that kind of thing to the original wells and as we get into manufacturing, we can substantially cut that down…
Subash Chandra – Jefferies LLC: My follow-up is on, I guess, related to Tronox. I guess early, this month, (you largely) – this Idearc versus Verizon seemed like it was favorably resolved for the defendants in this case and should reflect well on Tronox. I was curious, if how similar you thought that case is to Tronox and/or how different?
Robert K. Reeves – SVP, General Counsel, CAO and CCO: This is Bobby Reeves. Good morning. We don’t have anything new to report on Tronox. The 10-Q that was filed late yesterday continues to have a very extensive description of this matter. We’re still confident in the merits of the case and we’re anxious to get a ruling from Judge Gropper soon. As for other cases that are decided, that happens periodically and we’ll certainly use those that are beneficial to us to the extent we can.
Matthew Portillo – Tudor, Pickering, Holt & Co.: Just two quick questions from me. In regards to the Permian, I was hoping that we could get maybe a little bit more color on the 30-day rates there and then potentially the targeted zone in the Wolfcamp that you are drilling and any color on kind of initial liquids cuts on those wells?
Charles A. Meloy – SVP, Worldwide Operations: This is Chuck again. The wells have been performing very well. We’re just now getting them on production. We feel good about them, because we have a lot of offset activity going on in the same interval which is we refer to it as the beta and various industries, partners have different names for the Wolfcamp ventures out there, but it’s pretty exciting. They are good piece, approximately 15 miles along that line and we have a number of offsets in and around our acreage position that also has good rates and have a little more production time on them. So, they appear to be some pretty stout EURs based on the offsets. And we’re looking at these and we’re excited enough about that we’re moving in additional rigs and will be delineating the entire are over the next few months and getting more production and start sizing the thing up. But because we have offsets and there’s quite a bit of well data in the area from other operators and that actually a little bit thinner with regard to the section we are feeling really good about this…
R. A. Walker – President and CEO: Chuck our oil liquids’ cut is about 8% largely oil.
Charles A. Meloy – SVP, Worldwide Operations: Yes. It’s mostly oil.
Matthew Portillo – Tudor, Pickering, Holt & Co.: Then just a quick follow-up there in terms of the CapEx plans. Could you give us a little color on maybe how many rigs you are running or how would you think about this play from an acceleration perspective?
Charles A. Meloy – SVP, Worldwide Operations: Well we hope to get about five or six working in the Wolfcamp here in the next few months and the cool thing I think that we have is the efficiency that we have seen in the rest of our program allows us to do this (within sight) of our original capital guidance and I think that’s a great compliment to our drilling and completions teams. They have just done an outstanding job this year of really using our capital very efficiently and very constructively and we are taking advantage of the softness in the market, the drilling rigs and completion services right now. So we are doing this inside our budget. When we get into manufacturing mode we have shown time and time again these guys can really drive down the cost and so it’s a little early to size up what the actual economics of the play will look like. But I think our actions probably speak (louder now) as we are moving five rigs in the play – five or six rigs into the play over time and pretty quickly on the yields with some really good initial rates…
R. A. Walker – President and CEO: This is Al. I think I would think about this as a coming attraction for 2014 and beyond. The stuff that we will do this year is really more the exploration appraisal type of work and that as we announce early next year our capital plans for ’14, if we continue to see the types of things we are early on seeing in this play it could represent a fairly meaningful part of our CapEx next year.
Matthew Portillo – Tudor, Pickering, Holt & Co.: My last question, just in regards to guidance, a slight downtick in gas price realizations for the back half of this year? I was just curious, is that being driven by any particular region or just any color on kind of the wider differentials?
A. Scott Moore – VP, Marketing: I would say that we are primarily seeing a little pricing pressure in Marcellus, which is flowing back into realization through our gas pricing, pipeline utilization and quite high the tendency in Transco systems, but there are significant expansions coming into service in November, which has helped alleviate that situation.
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