Assessing Anadarko’s Permian Acreage
In April 2019, Chevron Corporation and Occidental Petroleum both made bids to acquire Anadarko Petroleum Corporation. The key prize is Anadarko’s Permian position. Chevron has since bowed out and Oxy is expected to be the new operator of that position. The acreage is highly contiguous and can support extended laterals and full-scale development. The 240,000 net acre position spans Reeves, Ward and Loving counties in the core of the play.
The footprint holds exceptional Wolfcamp strata, which is amongst the best in the Permian. The acreage sits on top of thick sections of hydrocarbon bearing rock in the Wolfcamp A/B and Bone Spring Formations. Historically, Anadarko has focused on the Wolfcamp A but has also drilled wells in the Wolfcamp B and the 3rd Bone Spring. Multi-bench upside exists.
Across Anadarko’s position, the Wolfcamp A is up to 970 feet (296m) thick with fair to good total organic carbon (TOC) around 1.5-3.5% (Figure 1). A large percentage of the reservoir is saturated with hydrocarbons as it has good porosity (5-10%) and relatively low water saturation (25-50%). Additionally, the formation sits in the condensate to black oil fluid window and boasts higher liquids cuts compared to the western portion of the Delaware Basin.
Well Performance in Anadarko's Permian Acreage
There is also scope to improve on Anadarko’s well performance. Wood Mackenzie’s Lens Well Evaluator data shows Anadarko underperforms offset operators in its core acreage (Figure 2). This is because the company often drilled single wells to hold leases and secure JV operatorship and utilised conservative completion techniques. By comparison, Oxy consistently uses enhanced completions and pad development. It is clear the operator sees scope to improve well performance by leveraging these techniques and the premier subsurface conditions on the position to generate value.