Anadarko Phobos discovery in deepwater Gulf of Mexico shows promise

Anadarko Petroleum Corp. (NYSE: APC) has made another oil discovery in the deepwater Gulf of Mexico. The Phobos-1 well encountered approximately 250 net feet of oil pay in Lower Tertiary-aged reservoirs.

“Our 2013 Gulf of Mexico exploration program is off to an outstanding start, as Phobos marks our third significant deepwater success this year,” Anadarko Sr. Vice President International and Deepwater Exploration Bob Daniels said. “Phobos is our first well in the previously untested Sigsbee Escarpment area of the Gulf of Mexico and successfully tested a significant four-way structure in the Lower Tertiary. Phobos’ close proximity to our Lucius project is expected to further enhance the economics of this potential future development.”

Analysts at Jefferies LLC noted Thursday that the potential could be sizable. While no oil was encountered in the Pliocene/Miocene/Wilcox targets, the oil discovery in the Lower Tertiary has low viscosity and the reservoir has good (15%) porosity, the analysts wrote in a note to investors Thursday.

The prospect “could have more than 100 mmboe of resource potential assuming the four-way structure has 8,000 acres of closure,” the analysts said. “In comparison, the nearby Lucius prospect has a resource potential of more than 300 mmboe.”

The Phobos discovery, located in Sigsbee Escarpment block 39, was drilled to a total depth of 28,675 feet in approximately 8,500 feet of water, approximately 11 miles south of Anadarko’s Lucius discovery, which is under development. Anadarko currently is incorporating the data from the Phobos well to determine future activities.

Anadarko is the operator of the Phobos discovery with a 30% working interest. Other co-owners in Phobos are Plains Exploration & Production Co. (NYSE: PXP) with a 50% working interest and Exxon Mobil Corp. (NYSE: XOM) with a 20% working interest.

Overall, the Phobos discovery adds incremental upside to shares, said Jefferies, who noted shares of Anadarko were trading at its P1 of $83/shr.


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