Anadarko ups Mozambique gas reserves again & proposed liquefied natural gas operation in the region…

 

By Tom Bergin

LONDON (Reuters) – U.S. oil company Anadarko Petroleum Corp said its major gas finds offshore Mozambique were around twice as large as it earlier thought, adding support to hopes that East Africa will become another major gas production centre.

Anadarko said on Monday that the results of its Barquentine-3 appraisal well showed its fields had recoverable reserves of 15 to over 30 trillion cubic feet (Tcf) of natural gas — compared to total UK gas reserves of 9 Tcf, according to the BP Statistical Review of World Energy.

“This could be one of the most important natural gas fields discovered in the last 10 years,” said Anadarko Chairman Jim Hackett.

Previously, Anadarko said the fields, in which Japan’s Mitsui & Co Ltd and Dublin-based Cove Energy Plc have stakes, held “at least 10 Tcf” of gas.

Cove shares traded up 10 percent at 87.25 pence, outperforming a 1.9 percent rise in the STOXX Europe 600 Oil and Gas index. Shares of Andarko climbed 6 percent in early New York Stock Exchange Trading to $76.50.

Analysts at Peel Hunt said they had upgraded their target price for Cove shares to 166 pence from 126 pence.

Anadarko said the results supported its plans to build a liquefied natural gas (LNG) export facility in Mozambique.

Analysts said the latest drilling success should also make investors more confident that other prospects might find gas.

“Today’s announcement also significantly de-risks a further 15 prospects and leads identified on the licence,” Richard Griffith at Evolution Securities said.

Explorers see Anadarko’s finds as evidence of a trend of oil and gas fields extending along the East Coast of Africa — a region not seen in previous decades as having good exploration prospects.

Last month, Italian oil group Eni said it had made a giant natural gas discovery — the biggest in its history — offshore northern Mozambique, close to the Anadarko fields.

Hopes of other major finds have drawn a rash of other companies to the area including Britain’s BG Group Plc, Portugal’s Galp, Norway’s Statoil ASA and Texas-based Exxon Mobil Corp.

Cove Energy is seen as a possible bid target or at least a willing seller of its Mozambique assets since it is largely a financial investor.

However, until recently, the company’s assets were seen as too early in the exploration stage to be attractive to Asian state-backed companies which are acquisition hungry but which prefer to buy companies or field.

Nov. 28, 2011, 4:30 p.m. EST
Anadarko touts East Africa natural gas prospects
Shares surge on news; LNG export center envisioned off Mozambique

By Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) — Anadarko Petroleum Corp. on Monday doubled its reserve estimate for natural gas fields off the coast of East Africa and said it’s moving toward an investment decision on a proposed liquefied natural gas operation in the region.

Anadarko APC -1.10% said it could recover up to 30 trillion cubic feet from waters near Tanzania and the island nation of Madagascar — an area that the company hailed as possibly “one of the most important natural gas fields discovered in the last 10 years.”

Nearly 4 trillion cubic feet were in storage in the United States as of last week, according to the Energy Information Administration. The U.S. consumes about 2 trillion cubic feet of natural gas per month

 

Shares of Anadarko jumped 5.5% as energy stocks rallied amid a 291-point jump in the Dow Jones Industrial Average.

Anadarko said the latest in a series of exploration wells, the Barquentine-3, encountered more than 600 feet of natural gas pay and helped it lift its reserve estimate for the area.

In discussing its findings, the company also presented a conceptual design for an LNG processing facility envisioned for the region, with a preliminary design by KBR Inc.KBR -0.93% .

Analysts at Canaccord Genuity Energy Research reacted to the news by reiterated their buy rating and $103 price target for Anadarko.

The announcement amounts to a positive for the company since it suggests a bigger resource, even as analysts said exports from Mozambique won’t likely start until 2018, beyond its usual five-year horizon for profit estimates.

“This announcement has no impact in our model though reinforces our view that Anadarko’s deepwater exploration portfolio and execution is world-class,” Canaccord Genuity said.

The Barquentine discovery comes after Anadarko announced in 2010 two of the largest deepwater discoveries in the world at its Windjammer and Lagosta wells in Mozambique.

All told, Anadarko holds stakes in 13 million gross acres in Mozambique and Kenya in East Africa.

Anadarko is the operator of the fields in Mozambique, with an ownership stake of 36.5%.

The remainder is divided by ENH Hydrocarbonetos de Mozambique, Mitsui & Co. Ltd.JP:8031 +4.15% , Videocon, Bharat Petro Resources, and Cove Energy PLC.

Anadarko’s update on Mozambique comes less than a month after the company announced a find of up to 1.5 billion barrels of oil in the Wattenberg shale in northeast Colorado. See: Anadarko’s strike in the Rocky Mountains

 

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