Tickers in this Article: APC, SM, SWN, CLR
Anadarko Petroleum (NYSE:APC) announced a major increase in capital spending in 2011 as the company attempts to meet its ambitious goals on production and proved reserve growth over the next few years. These funds will be spent both internationally and in onshore and offshore areas of the United States.

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Company Goals
In March 2010, Anadarko Petroleum established a goal of 7-9% compound annual growth in production over the next five years. The company also hopes to increase its proved reserves to a minimum of three billion barrels of oil equivalent (BOE) by 2014.

Anadarko Petroleum spent $5.169 billion in capital in 2010, resulting in production of 635,000 BOE per day during the year, a 7% increase over 2009. Proved reserves totaled 2.42 billion BOE at the end of 2010. (L4)

Other Operators
Another exploration and production company with plans to rapidly grow production and proved reserves is Continental Resources (NYSE:CLR), which has a goal to triple production and proved reserves over a five-year period. The company reported 42% growth in proved reserves in 2010.

Two other operators with outstanding proved reserve growth in 2010 are Southwestern Energy (NYSE:SWN) which reported 35% growth to 4.94 Tcfe, and SM Energy (NYSE:SM), which increased its proved reserves by 27% to 985 Bcfe.

2011 Capital Expenditures
Anadarko Petroleum will spend between $5.6 and $6.0 billion in capital in 2011 across its diverse set of properties. The company estimates that this level of expenditures will result in production of 244 to 248 million BOE in 2011. This would put growth in a range of 3.8-5.5% for the year. Although this is below the production growth goal of 7-9%, the company has time to make up for this shortfall.

Onshore United States
Anadarko Petroleum has allocated 55% of its 2011 capital budget for the onshore United States, where the company is active in at least half a dozen different plays.

In 2011, Anadarko Petroleum plans to drill 200 wells in the Eagle Ford Shale, and another 250 wells in the Marcellus Shale. The company expects sales volumes from shale gas to be 10% of the company's total by the end of 2011.

Anadarko Petroleum also has a large collection of assets in various areas in the Rocky Mountain area including the Green River and Powder River basins.

Offshore United States
Anadarko Petroleum is putting 10% of its 2011 capital budget into the Gulf of Mexico. The company has more than one hundred exploration prospects in this area and a number of wells planned for 2011. Anadarko Petroleum also has various development projects under way in the Gulf of Mexico and will move some of these forward in 2011.

International
Anadarko Petroleum is putting 25% of its budget into the international and frontier part of its portfolio. The company is most active in Africa, where it plans between 15 and 20 exploration and appraisals wells in 2011. Anadarko Petroleum has reported the most success in offshore Mozambique and West Africa. The company also has prospective areas in Brazil, Southeast Asia and New Zealand.

The Bottom Line
Anadarko Petroleum is budgeting for a major boost in capital spending in 2011, as the company works towards its goal of 7-9% CAGR in production over five years. The company has a number of properties in the United States and abroad to create this growth. (To learn more, see our Oil & Gas Industry Primer.)

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