UPDATE: Anadarko Plans To Raise Capital Spending, Production

Anadarko Petroleum Corp. (APC) said Thursday it plans to significantly increase capital spending and production during 2011, with more than half of the total investment focused on its U.S. onshore operations and 10% targeted on the Marcellus and Eagle Ford shale programs.

Speaking to analysts during a conference call, Anadarko executives said they expect to close next week a joint-venture agreement for the company's Eagle Ford shale acreage in south Texas with an undisclosed partner. They also said the company could, at some point, enter into a joint venture for its Niobrara Shale in Colorado and Wyoming, and other areas, including international regions.

"As it relates to the Eagle Ford.. .we hope to have a definitive agreement to discuss with you in the coming week," said Al Walker, Anadarko's President and Chief Operating Officer. "We are pretty confident that we and that partner will be able to do things here and elsewhere."

Anadarko said last year that it was planning to announce a joint venture in Eagle Ford, where it is the largest oil producer, by year end and that it would be similar to the $1.4 billion agreement it completed with Japan's Mitsui & Co. (8031.TO, MITSY) in the Marcellus Shale in Pennsylvania.

The oil-and-gas producer said it expects 2011 capital expenditures of $5.6 billion to $6 billion, compared with $5.17 billion last year. The estimates don't include Western Gas Partners LP (WES), which is controlled by Anadarko. The Houston area-based company also projected 2011 output of 244 million to 248 million barrels of oil equivalent, up from 235 million BOE last year. The company's forecast assumes that 42% of its 2011 production will be liquids, including oil, according to UBS.

Anadarko also reiterated its five-year production-growth forecast of 7% to 9% per year and projected its oil and gas reserves will grow 5% per year, reaching three billion barrels of oil equivalent in 2014. The company plans to replace about 150% of its production this year.

About 25% of Anadarko's 2011 capital spending is targeted for exploration, with about $1 billion earmarked for drilling activities. The company said it plans to drill 25 exploration and appraisal wells this year, with about half of them in West Africa, three to six in the Gulf of Mexico, three to five in East Africa, three appraisal wells in Brazil, and one wildcat in Southeast Asia and another one in New Zealand. Anadarko outlined plans to spend about $870 million in 2011 advancing its three largest projects: Jubilee in Ghana, Caesar/Tonga in the Gulf of Mexico and El Merk in Algeria.

Anadarko also said it plans to continue accelerating its growth in shale plays, aiming to bring its shale production to 10% of its daily sales volumes by year end.

The company's shares, which were recently trading 1% up at $80.47, have recovered since the Gulf of Mexico oil spill, as concerns about Anadarko's exposure to the Deepwater Horizon disaster in the U.S. Gulf of Mexico led to a selloff. Anadarko has a 25% interest in the Macondo well, which was operated by BP PLC (BP, BP.LN).

The company in January reported that its fourth-quarter profit fell 52% amid higher prior-year derivatives gains, while total production and revenue improved.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207;

isabel.ordonez@dowjones.com

-By Tess Stynes, Dow Jones Newswires; 212-416-2481;

Tess.Stynes@dowjones.com

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