Editorial

Anadarko's Permian acreage: a prize worth fighting for

Just how attractive is the rock underneath Anadarko's assets?

Chevron made a big bid for Anadarko Petroleum. Now Occidental Petroleum has put even more capital on the line for a chance to own Anadarko's assets.

This is a preview of our recent insight: Assessing Anadarko’s Permian acreage: what is the prize Chevron and Oxy are competing for? Wood Mackenzie subscribers can access the full report here.The standalone report can be purchased in our eCommerce store.

While Chevron eyes a seat at the table of ultramajors with the purchase of Anadarko, Occidental's appetite is transformative in its own right. The Permian assets are center stage in both bids. Here are three reasons why the subsurface properties of Anadarko's Wolfcamp and Bone Spring acreage are worth a bidding war:

1.    Anadarko acreage supports extended laterals and full-scale development

The highly contiguous 240,000 net acre position spans Reeves, War and Loving counties. Compared to most of the Delaware Basin, its high-liquids cuts are highly attractive.

2.    The acreage has thick sections of hydrocarbon-bearing rock

This attractive rock lies in the Wolfcamp A/B and Bone Spring. Historically, Anadarko placed priority on Wolfcamp A, but has also drilled wells in Wolfcamp B and the third Bone Spring. We see substantial multi-bench upside in Anadarko's acreage.

3.    There's scope to improve Anadarko's well performance

Anadarko's well metrics to data have underperformed offset operators in its core acreage. The company often drilled single wells to hold leases and utilized conservative completion techniques to help it move fast.

Whether Chevron or Occidental win the bidding war, completion techniques will evolve in a good way. Both bidders consistently use intense completions and pad development, so Anadarko's acreage will be exploited in a different fashion going forward.

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