UPDATE 1-Anadarko's Gulf of Mexico well latest in huge finds -analysts

Wed Mar 20, 2013 4:45pm EDT

* Shenandoah field could be double or triple previous estimates

* Find latest in string of potentially huge fields

* Company aims to continue appraisals

* Anadarko shares rise 3.7 pct

By Kristen Hays

HOUSTON, March 20 (Reuters) - Anadarko Petroleum Corp's latest well results in its Shenandoah field in the Gulf of Mexico is a potentially huge find among a string of big discoveries that illustrate the prolific basin's importance to U.S. crude output, analysts said on Wednesday.

Results of Anadarko's Shenandoah-2 appraisal well, which tested how much oil could be in the field, showed the reservoir could be more than two or three times larger than the company's estimate of more than 300 million barrels of oil, analysts said.

Pressure and log data from the well also show Anadarko could potentially recover a higher percentage of oil from the Shenandoah field than in other areas of the vast Lower Tertiary trend, the Gulf's deepest, most challenging and most promising play, estimated to hold up to 15 billion barrels of oil.

"The deepwater Gulf of Mexico is witnessing an astonishing run of discoveries and hydrocarbon augmentation," Simmons & Co International said in a note to investors on Wednesday.

"Quite a renaissance from the depths of Macondo," Simmons said, referring to BP Plc's doomed well that ruptured in 2010 and spewed more than 4 million barrels of oil into the Gulf.

Other notable well results on discoveries in the Lower Tertiary since 2010, according to Simmons, include Exxon Mobil Corp's Hadrian field with an estimated 700 million barrels of oil; Chevron Corp's Moccasin field with an estimated 200 million barrels of oil equivalent (boe); and Royal Dutch Shell's Appomattox field with an estimated 500 million boe.

BP also estimates that its Mad Dog field could have up to 4 billion boe, up from 1.5 billion boe. Construction on a second oil and gas platform for the field is slated to start by the end of this year.

Such finds show that deepwater exploration and production, where wells can cost more than $130 million each to drill tens of thousands of feet through thick salt and rock layers, remains critical to U.S. production, even alongside booming onshore oil output in North America, analysts said.

"The opportunity is vast as deepwater reserves currently comprise about 10 percent of global oil reserves," Simmons said.

About 29 percent of U.S. crude output came from the Gulf in 2009. Last year it had fallen to 23 percent as onshore production from tight oil and shale oil grew substantially.

'MASSIVE'

Anadarko said its Shenandoah-2 well, about 200 miles (322 km) south of the Louisiana coastline, showed more than 1,000 feet (305 meters) of net oil pay, meaning the drill pierced 1,000 feet of productive oil-bearing rock without having tapped any water. Exxon's Hadrian North well had a similar result.

"It's massive. One thousand feet's big, it's world class," said David Pursell, an analyst with Tudor Pickering Holt & Co in Houston who also is a petroleum engineer.

Anadarko's previous Shenandoah discovery well in 2009 showed about 300 feet (91 meters) of net oil pay, Capital One Southcoast said in a note to investors on Wednesday. Shenandoah-2's results prompted Capital One to increase its estimate of how much oil could be in the field to 900 million boe from 225 million boe.

"This is an exciting story and far from over as we await results from two other wells," Capital One said.

Pursell also noted that Anadarko said well results show "reservoir and fluid properties" that indicate it could show better recovery rates - or more oil will flow - than in other areas of the Lower Tertiary.

"Basically, they're saying that relative to the Lower Tertiary, not only is there a lot of oil here, but the reservoir's pretty good too," he said.

Anadarko anticipates more appraisal drilling "to advance this potentially giant project," according to Bob Daniels, senior vice president of deepwater and international exploration.

Anadarko shares closed up $3.12 or 3.75 percent at $86.40 on Wednesday.

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