The Oil Is Not Flowing ....

Jubilee producing less than expected

HOUSTON - Anadarko Petroleum Corp. APC said Wednesday that Ghana's massive Jubilee oilfield is producing less than expected and that some wells will have to be reworked in order to try to achieve the original production target.

"We have seen some greater-than-anticipated drawdown in several of the wells," Charles Meloy, Anadarko's senior vice president worldwide operations, told analysts during a conference call to discuss earnings. The problem wasn't associated with early depletion of the reservoir, but rather with the way wells were completed, Meloy added.

"The operator and the partnership have concluded that it's in the best interest of our development to go and see if we can remediate" the problem, Meloy said.

The company hopes Jubilee will achieve its target production once wells are reworked, but a longer-than-anticipated production ramp up could potentially increase the project's development costs and reduce net equity production to the field's partners.

Anadarko, which hold a 23.4% stake in Jubilee, said the field is producing 85,000 barrels of oil equivalent, significantly below the 120,000 barrels of oil per day the field was expected to be producing by the end of this year. The company said the Jubilee resource estimate remains unchanged.

Asked by an analyst how much it would cost to rework the Jubilee wells, Meloy referred the question to the operator, London-based Tullow Oil PLC (TLW), which has a 34.7% interest in the field.

Other co-owners of Jubilee include Kosmos Energy Ltd. KOS, with 23.49% interest, Sabre Oil and Gas, with 2.81%, E.O. Group Ltd., with 1.75%, and Ghana National Petroleum Corp., with 13.75%.

Separately, Anadarko said that it is seeking to sell all of its Brazilian assets and that it anticipates to close the potential sale next year. "Strong interest has been expressed in our Brazilian properties," said Anadarko Chief Executive Jim Hackett.

The head of Anadarko also said the company expects to increase its capital expenditures next year over this year's budget of up to $6.3 billion.