Anadarko Petroleum Corp. said it will invest within its means in the first half of the year, hopeful crude prices could keep climbing but wary of market volatility.
The Woodlands-based oil explorer has begun laying the groundwork for expanded drilling operations in places like the Delaware Basin in West Texas, and the company’s oil-production growth could eventually surge after 2017, Anadarko CEO Al Walker told investors on Wednesday.
“As we come out of a trough, we can’t just immediately turn on a dime and expect to go back to where we were before the last two years,” Walker said.
Anadarko didn’t provide many details about its investment plans on Wednesday – it will disclose those plans in March. Walker said the company will try to keep its capital expenditures cash-flow neutral in the first half of the year, meaning it won’t outspend the cash it brings in from selling oil.
The company sold off more than $4 billion in assets last year and expects another $3.5 billion in sales to close in the first quarter, giving it a large cushion of cash.
Walker said he believes there’s a good chance U.S. oil prices will reach $60 a barrel this year, and with its cash hoard and income rising alongside crude prices, the company could fund an expansion of its drilling operations in the Delaware Basin in Texas, the DJ Basin in Colorado and the deep-water Gulf of Mexico.
It wants to grow oil and gas production some 12 to 14 percent over the next half decade, largely through developing these plays, if oil stays above $50 a barrel. But Walker said the company wouldn’t immediately burn through its cash cushion.
“If we’re wrong on oil prices, one of the things we want to be mindful of, giving the volatility of the oil markets, is we want to retain a little dry powder and flexibility,” Walker said.