January 27, 2010 / 2:17 PM / 10 years ago

UPDATE 3-Anadarko test well hits giant reservoir in GoM

* Says discovery in deepwater Gulf of Mexico

* Anadarko shares up 4 pct

* Plains Exploration, Mariner Energy hold stakes in the well

* Plains Exploration shrs up 5 pct, Mariner up 13 pct (Adds analyst comments, updates share movement)

By Hezron Selvi

BANGALORE, Jan 27 (Reuters) - Anadarko Petroleum Corp (APC.N) said one of its deepwater test wells in the Gulf of Mexico (GoM) hit oil and gas bearing sands in what could be one of its biggest finds ever, sending its shares up 4 percent.

The company said it encountered 600 net feet of high quality oil bearing sands with additional gas bearing sands at an appraisal well, which was drilled to a total depth of about 20,600 feet in about 7,100 feet of water.

“This is triple the 200 net feet of primarily natural gas pay found in the discovery well and Lucius is now likely to be APC’s largest ever GoM discovery,” Citigroup analyst Robert Morris wrote in a research note to clients.

Morris said today’s results increase the oil potential from the find to the 250-500 million barrels of oil equivalent (mmboe) range, up from the earlier generic target size of 100 mmboe.

The analyst noted that 250 mmboe equates to more than 10 percent of Anadarko’s total year-end 2008 proven reserve base.

“The data we have collected so far and the results of the exploration and appraisal wells demonstrate that this is a major oil discovery,” John Christiansen, a spokesman for Anadarko, said.

Christiansen said the company plans to do some more appraisal drilling to better determine the full extent of the well.

“It’s still pretty early in the process, so we’ve got some more work to do before coming to any definitive decisions about the ultimate size and best path toward development,” he added.

The company declined to say when the first production from the well would be. However, large offshore developments typically take years to reach commercial production.

“The potential size of this discovery makes a stand-alone development more likely with first production as early as 2014,” said Citigroup’s Morris, who reiterated his “buy” on Anadarko.

Anadarko has a 50 percent working interest in the well, with Plains Exploration and Production Co PXP.N and Mariner Energy Inc ME.N holding 33.3 percent and 16.7 percent, respectively.

Last week, London-based explorer Tullow Oil Plc (TLW.L) said it had struck oil in offshore Ghana, proving the existence of a “major” new field in the region. Anadarko holds a stake in the property.

Anadarko shares rose to a high of $66.21 before losing some of their gains to trade up 1.36 percent at $64.76 in afternoon trade on the New York Stock Exchange.

Shares of Plains Exploration were up about 5 percent at $34.43, after touching a new year high of $36.60 earlier in the session. Mariner Energy shares were up 13 percent at $15.48.

For the alerts, please double click [ID:nWNAB8965] (Additional reporting by Arup Roychoudhury in Bangalore and Matt Daily in New York; Editing by Saumyadeb Chakrabarty, Sweta Singh)

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