Anadarko Petroleum (NYSE:APC) is moving forward with the development of the Lucius field in the Gulf of Mexico, and recently signed a joint venture agreement to help finance this project. The company expects first oil and gas production from this field in the last half of 2014.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Discovery Well
Anadarko Petroleum drilled its first exploration well at the Lucius field in late 2009 and targeted multiple Miocene and Pliocene sand formations. The company found 200 feet of net oil and gas pay at a depth of approximately 20,000 feet. This discovery capped a successful year for Anadarko and was its fifth discovery in the Gulf of Mexico in 2009. Other successful exploration wells in 2009 are listed in the table below:

Date Well Block
Feb 2009 Heidelberg Green Canyon 859
Feb 2009 Shenandoah Walker Ridge 52
Jun 2009 Samurai Green Canyon 432
Jul 2009 Vito Mississippi Canyon 984

SEE: Oil And Gas Industry Primer

Lucius Appraisal
In January 2010, Anadarko followed up its success at the Lucius field with a sidetrack appraisal well less than a mile from the original exploration well and found 600 feet of net oil and gas pay. The company drilled a second appraisal well in mid-2010 and confirmed the presence of additional oil and gas resources at the Lucius field.

Development Plans
In mid-2011, the company started to plan the development of this large field, which has an estimated 300 million barrels of oil equivalent of oil and gas resources. It signed an agreement with Exxon Mobil (NYSE:XOM) to unitize and jointly develop four separate blocks in the Keathley Canyon area of the Gulf of Mexico.

SEE: Investing In Oil And Gas UITs

Anadarko plans to construct a floating production facility in the area to handle the production from the Lucius field and the Hadrian South field operated by Exxon Mobil. The production facility is expected to have a capacity of 80,000 barrels of oil and 450 million cubic feet of natural gas per day.

Exxon Mobil Corporation holds a 15% working interest in the Lucius development. Other operators involved include Plains Exploration (NYSE:PXP) with a 23.3% working interest, Apache (NYSE:APA) with 11.7%, Petrobras (NYSE:PBR) with 9.6% and Eni (NYSE:E) with 5.4%.

Joint Venture
Anadarko recently announced a joint venture agreement with an unidentified party to help finance the Lucius development. The company will receive $556 million in the form of a drilling carry in exchange for a 7.2% working interest in the project, lowering the stake held by Anadarko to 27.8%. It expects the drilling carry to completely cover its share of the required capital expenditures at the Lucius project.

SEE: 5 Biggest Risks Faced By Oil And Gas Companies

The Bottom Line
Anadarko Petroleum is known for its skill in exploring and developing deepwater oil and gas resources, and this reputation should make investors confident that the Lucius development will be successful and add to the company's production and reserve base.

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

Related Articles
  1. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  2. Economics

    Why It Is Important to Follow Crude Oil Inventories

    Discover what oil inventories are, how they are communicated and what important insights they provide into the state of the oil market.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  7. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  8. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  9. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  10. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

Trading Center