Anadarko Petroleum (NYSE:APC) plans to spend 50 % of the company's 2012 total capital budget to develop crude oil and liquids plays in the onshore United States. The company will focus mainly on formations in Utah, Colorado and Texas. To know more about oil and gas, read Oil And Gas Industry Primer.

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2012 Capital Budget
Anadarko has allocated between $6.6 billion and $6.9 billion in capital for its exploration and development program in 2012. The development budget will range from $5 billion to $5.4 billion, with 66% directed to the onshore U.S.

Eagle Ford Shale
The company has 200,000 net acres spread across several counties in South Texas that are prospective for the Eagle Ford Shale. It plans to operate 10 rigs and drill 250 wells here in 2012, focusing on the oil and condensate windows of the play.

Anadarko recently raised the estimate of the resource potential of its Eagle Ford Shale acreage to 600 million barrels of oil equivalent (BOE). These resources will have a crude oil and natural gas liquids content of 65%.

It estimates that the average well here will cost $5.8 million and generate a pretax internal rate of return in excess of 100%.

Other companies are also targeting the Eagle Ford Shale for development. EOG Resources (NYSE:EOG) has 647,000 net acres under lease, and recently increased the total resource potential from 900 million BOE to 1.6 billion BOE.

Marathon Oil (NYSE:MRO) has 305,000 net acres under lease and expects to invest $1.4 billion annually over the next five years. The company estimates that its Eagle Ford Shale production will reach above 100,000 BOE per day by 2016.

Permian Basin
Another major area of development for Anadarko in 2012 will be the Permian Basin, where it has budgeted for 130 wells during the year. The company is working on the Avalon Shale and Bone Spring plays and estimates that it has several hundred thousand acres prospective for these two plays.

Wells here will also produce mostly oil and liquids and it estimates that returns in the Avalon Shale and Bone Spring plays will range from 39 to 67%. The company expects to generate future growth from other formations in the Permian Basin.

East Texas
Anadarko has also disclosed a position in an emerging play in East Texas and has assembled a lease position of 116,000 net acres here. The company plans to operate six rigs here and drill 73 wells in 2012. It expects wells here to have an average liquids content of 36%.

Rocky Mountains
The company has a deep inventory of development areas in the Rocky Mountains, and will focus on the Wattenberg Field and the Greater Natural Buttes area in 2012. It plans to drill 570 wells in these two areas during the year.

The Wattenberg Field is in Colorado and has attracted many other operators. Bill Barrett Corporation (NYSE:BBG) has acreage here and plans to drill 40 horizontal wells in 2012.

The Bottom Line
Anadarko Petroleum is attractive to many investors due to its large portfolio of oil and gas assets that are diversified geographically. The company has been successful at exploring and developing this portfolio, and every indication is that this success will continue with its unconventional portfolio in 2012. For additional reading, check out A Guide To Investing In Oil Markets.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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