Oil production out of Weld County has continued to put smiles on corporate officials reporting earnings.
Anadarko Petroleum Corp., one of the top two drillers in the county, has increased its Wattenberg sales from last year at this time by 40 percent, company officials reported Tuesday.
"I'd probably view it as a grand slam," said Chuck Meloy, senior vice president of Anadarko's U.S. operations, responding to an analyst's question Tuesday about the Wattenberg production in the company's first-quarter earnings call. "It's been a wonderful quarter for us."
Overall, the company had record daily sales volumes of 793,000 barrels of oil equivalent among its U.S. and global production units. U.S. production hit another record, however, bringing in 55 percent more in sales volumes than the same time last year, officials reported.
Overall earnings, however, dropped to $484 million, from $2.16 billion reported in the first quarter of 2012. Oil and gas companies often look to their cash positions to determine their financial health. Anadarko finished the quarter with $2.1 billion on hand, compared to $1.9 billion the same time last year. One large expense was attributed to "dry hole" costs in the company's exploration program, which grew to $158 million from $89 million last year at this time.
Company officials reported that the Wattenberg Field, alone, continues to be a top performer, averaging 113,000 barrels of oil equivalent per day in sales volumes -- that's oil, natural gas and natural gas liquids. Just last December, Anadarko reached a milestone of 100,000 barrels of oil equivalent per day out of the Wattenberg. Colorado production, which is averaging rates of return exceeding 100 percent, has dwarfed that of its other oil plays in Texas and Utah, company documents report.
The company attributes much of its success to horizontal drilling, which produces the equivalent of several vertical wells with the use of hydraulic fracturing. The wells are drilled more than a mile below the surface to the hydrocarbon-producing zones, then drilled horizontally into those zones, tapping a variety of spots in that zone for several thousand feet more. Industry officials say it's a more efficient way to produce because it reduces surface damage and uses less water than vertical drilling.
The longer the lateral, the more production, officials said. Noble, for example, reported this quarter that the company drilled the longest lateral in Colorado at just shy of 10,000 feet, with plans for another 60 extended laterals this year.
"What we've seen is very similar to what Noble announced, that longer is better to a degree, and we've seen more and more recovery," Meloy said.
Company officials reported they are spending less on wells in the Wattenberg than in previous years, mostly in water savings.
"We saw over $350,000 per well in savings in the last quarter with regard to lower water costs, lower water delivery costs and then crude completion costs," Meloy said.
Anadarko already is upping its expected well count this year in the Wattenberg, Meloy reported.
"We started out thinking we will drill around 300 wells this year. We'll end up drilling around 340," he said. "Most of them will be longer laterals than what we originally intended. So we know the value of this thing. It's immense. We are on the job to accelerate that value."
I'd probably view it as a grand slam. It's been a wonderful quarter for us.
-- Chuck Meloy, senior vice president of Anadarko's U.S. operations ___