Ghana announced that its national oil company and its partners, including Anadarko Corp. (NYSE:APC), would be investing a total of $20 billion in the country’s Jubilee fields.  The new investments are aimed at developing newly discovered fields in the region.
Anadarko holds a 24.1% stake in the Jubilee fields. The announcement comes on the heels of Tullow, its operating partner of the fields, cutting the upper end of its production estimate for the fields in 2012 from 90,000 bbls/day to 80,000 bbls/day.  The company retained its low-end estimate at 70,000 bbls/day. The new investments should help increase the output from the fields over the next few years.
We have a $90 price estimate for Anadarko Corp., which is at at a 35% premium to its current market price.
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According to Ghana’s National oil company, the Jubliee field will require investments up to $20 billion over the next 10 years to develop clusters of new discoveries.  Ghana is looking at make these investments in collaboration with its partners to bring new production online. The Jubilee fields currently produce about 63,000 bbls/day and production will increase to about 70,000-80,000 bbls/day by the end of the year. The announcement comes at a time when oil is becoming an important export commodity for Ghana and new discoveries have been made in a number of regions in the deep water Tano block.
Anadarko has stakes in a a number of deep water blocks across Africa and has been involved in a series of high profile discoveries in the region. With production set to begin from many of these blocks over the next few years, the company’s oil and gas output is set to see an increase over our forecast period. However, deep water exploration and production also requires major investments and the company’s capital expenditure is also expected to rise in the same period. High crude oil prices and the lucrative price of natural gas in international markets should make the investments highly profitable for Anadarko.
- Anadarko Makes New Oil Discovery in West Africa; Adding to List of New Prospects (trefis.com)
- Anadarko Earnings Preview: Liquids Production Volumes Are Key (trefis.com)
- Ghana, Oil Partners to Invest $20 Billion in Oil Fields, Bloomberg [↩] [↩]
- Analyst trims production view for Anadarko Kosmos, MarketWatch [↩]