anadarko petroleum 2Q08 Operations Report

ANADARKO PETROLEUM CORPORATION
2008

Operations Report
Second Quarter

Investor Relations:

John Colglazier
Vice President
john.colglazier@anadarko.com
832.636.2306

Chris Campbell, CFA
Manager
chris.campbell@anadarko.com
832.636.8434

Danny Hart
Manager
danny.hart@anadarko.com
832.636.1355

Forward Looking Statement . . . 2
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Rockies . . . . . . . . . . . . . . . . . . . . . . . . . 4-5
Southern. . . . . . . . . . . . . . . . . . . . . . . . 6-7
Gulf of Mexico. . . . . . . . . . . . . . . . . 8-12
International / Frontier . . . . . . 13-15

NYSE:APC www.anadarko.com

Second Quarter 2008 ANADARKO PETROLEUM CORPORATION

Forward Looking Statement

Cautionary Note to U.S. Investors: The United States Securities This report contains forward-looking statements within the
and Exchange Commission (“SEC”) permits oil and gas meaning of Section 27A of the Securities Act of 1933 and Section
companies, in their filings with the SEC, to disclose only proved 21E of the Securities Exchange Act of 1934. Anadarko believes
reserves that a company has demonstrated by actual production or that its expectations are based on reasonable assumptions. No
conclusive formation tests to be economically and legally assurance, however, can be given that such expectations will prove
producible under existing economic and operating conditions. to have been correct. A number of factors could cause actual results
Anadarko uses certain terms in this operations report, such as to differ materially from the projections, anticipated results or
“estimated recoverable resources”, and similar terms that the other expectations expressed in this operations report. Anadarko
SEC’s guidelines strictly prohibit Anadarko from including in cannot guarantee that it will successfully execute on its
filings with the SEC. U.S. Investors are urged to consider closely exploration, drilling and development plans or meet its
the disclosure in Anadarko’s Form 10-K for the year ended production guidance. See “Risk Factors” in the company’s 2007
December 31, 2007, File No. 001-08968, available from Anadarko Annual Report on Form 10-K and other public filings and press
at www.anadarko.com or by writing Anadarko at: Anadarko releases. Anadarko undertakes no obligation to publicly update or
Petroleum Corporation, 1201 Lake Robbins Drive, The revise any forward-looking statements.
Woodlands, Texas 77380 Attn: Investor Relations. You can also
obtain this form from the SEC by calling 1-800-SEC-0330.

2


Overview
– RIG ACTIVITY –

2Q08 Rig Activity
Operated Non-Operated Total
22
Rockies 74
52
25
Southern 33
8
47
LOWER 48 107
60
1
Alaska 2
1
5
Gulf of Mexico 9
4
– CAPITAL SPENDING –
53
TOTAL U.S. 118
65
3
INTERNATIONAL 8
5
! The capital program totaled $1,232 million during the quarter, of 56
TOTAL COMPANY 126
70
which $928 million (75%) was dedicated to ongoing U.S. E&P
activity. Full-year capital expenditures are expected to be between
$4,550 and $4,750 million (excluding expensed exploration) with
– VOLUMES –
approximately 20% allocated to exploration.

! Sales volumes for the 2nd Qtr were 50 MMBOE, which was within
Capital Spending*
guidance (50-52 MMBOE), despite more than eight weeks of shut-
1Q08
2Q08
in production at Independence Hub.
$ MM $ MM
308
338
Rockies
Net Volumes (MMBOE)*
189
272
Southern
2Q08
497
609
LOWER 48 % Change
31
30
Alaska 2Q08 1Q08 2Q07** vs. 1Q08 vs. 2Q07
255
289
Gulf of Mexico 19 19 16 5% 20%
Rockies
784
928
TOTAL U.S. 11 11 12 1% -7%
Southern
102
100
INTERNATIONAL 30 29 28 4% 8%
LOWER 48
133
133
Midstream 2 2 2 4% -17%
Alaska
38
71
Capitalized Items / Other 11 15 10 -30% 12%
Gulf of Mexico
1,056
1,232
TOTAL COMPANY 43 46 40 -7% 8%
TOTAL U.S.
7 6 7 8% -4%
INTERNATIONAL
50 53 47 -5% 6%
TOTAL COMPANY
*Data may not add to totals due to rounding.

* Data may not add to totals due to rounding.
** 2Q07 volumes exclude divested volumes.

3


Rockies
Gross
Rig Activity Completed Wells
Net Volumes* Capital*
2Q08 2Q08
2Q08 2Q08
1Q08
Expl. Dev.
Oper. Non-Op.
$ MM
MMcf/d MBbls/d MMcf/d MBbls/d
TIGHT GAS
Natural Buttes 240 4 219 3 101 8 3 0 67
Wattenberg 174 19 165 17 84 7 1 0 120
Pinedale 73 1 69 1 39 0 26 0 54
Wamsutter 70 7 83 8 24 1 9 0 10
Other 68 4 84 5 17 1 6 0 40
CBM 379 0 348 -1 37 4 7 0 11
EOR 4 12 3 11 36 1 0 0 10
1,008 46 970 45 338 22 52 0 312
TOTAL

Tight Gas
EOR CBM *Data may not add to totals due to rounding.

Powder River CBM
– TIGHT GAS DEVELOPMENT –
WYOMING
Greater Natural Buttes
Pinedale Salt Creek
! Natural Buttes achieved another great quarter – growing volumes
st th
Wamsutter 10% from 1 Qtr and 35% from 4 Qtr 2007, with a new single-day,
Moxa Monell
gross-operated production record of 304 MMcf/d.
Monell
Atlantic Rim
! The Chipeta plant is now running at full capacity, processing 270
MMcf/d and increasing NGL production to 3,000 Bbl/d.
Greater
Wattenberg
Natural Buttes
Helper
! More than 50 wells were completed in the 2nd Qtr, including 16 wells
on a two-tier, 10-acre pad above the White River – a unique
operation that earned Anadarko the Earth Day Award from the Utah
Division of Oil, Gas and Mining.
UTAH COLORADO

4


Rockies
Wattenberg

! In the 2nd Qtr, Anadarko drilled a company-record 83 wells and ! At Monell, we recently completed a 10-well pilot drilling program to
evaluate the results of greater well density in existing CO2 flood
performed 227 fracs. Two additional rigs were mobilized in June. The
ramp-up program is on pace to drill more than 350 wells this year – a patterns.
50% increase from 2007.
– GREATER GREEN RIVER BASIN –
– COALBED METHANE DEVELOPMENT –
Moxa
! Operated Powder River CBM assets achieved a single-day, gross-
nd
record sales level of 408 MMcf/d in the 2 Qtr. The County Line field ! In the Moxa area, Anadarko has one operated rig and four non-
operated rigs. Through the end of the 2nd Qtr, the company spud 11
also set a gross-operated sales record of 200 MMcf/d during the
quarter. Total gross production for the asset (operated plus non- operated wells and 27 non-operated wells, and completed a total of 26
operated) exceeded 800 MMcf/d in late June. wells.

! The midstream expansion continued in the Powder River Basin with Wamsutter
the startup of the Big George Line. This major gathering lateral
immediately de-bottlenecked 75 MMcf/d of gas and we expect to ! In the Wamsutter area, Anadarko has one operated rig and 10 non-
operated rigs. Through the end of the 2nd Qtr, the company spud 12
provide significant system capacity for future Big George
development volumes. In addition, Phase III (Segment 1) of the Fort operated wells and 80 non-operated wells and completed a total of 52
Union Gas Gathering System (“FUGGS”) was completed, adding 200 wells.
MMcf/d of take-away capacity. Work on FUGGS Phase III Segment 2
was completed in late July, bringing total capacity on Fort Union to Pinedale
1.3 Bcf/d.
! Anadarko continues to participate in an active program with 27 rigs
– ENHANCED OIL RECOVERY – currently running in the Pinedale area. Along with our partners,
Ultra, Questar and Shell, Anadarko spud 128 wells and completed 88
wells through the end of the 2nd Qtr.
! Salt Creek Phase 5 was commissioned and CO2 injection commenced
during the 2nd Qtr. Construction for Phase 6 is ongoing and expected to
be complete at year end.

5


Southern
Gross
Net Volumes* Rig Activity Completed Wells
Capital*
2Q08 2Q08 2Q08
2Q08
1Q08
$ MM Expl. Dev.
MMcf/d MBbls/d Oper. Non-Op
MMcf/d MBbls/d
84 60 6 2 0 8
Haley 0 101 0
41 4 1 0 0 14
Ozona 1 40 1
59 3 0 0 0 0
Mid-Continent 1 59 1
Tight Gas
156 27 2 1 0 4
Bossier 0 153 0
Fractured Reservoirs
82 56 5 0 0 29
Carthage 5 81 5
Marcellus 44 61 7 1 0 6
Chalk 12 39 12
Other
Shale 92 62 4 4 0 25
S. Texas / Other 5 91 4
557 272 25 8 0 86
TOTAL 24 563 24

*Data may not add to totals due to rounding.
Hugoton

East Chalk
Haley
Carthage
Bossier ! On May 31, 2008, East Chalk reached record gas production of 100
East Chalk MMcf/d gross. By the end of the 2nd Qtr, the East Chalk drilling
Ozona
program had ramped up to seven operated rigs.
Maverick

Freestone
South Texas
! The Bossier asset team continued to execute a successful program,
completing three operated wells during the quarter. In early July, an
Carthage additional rig began drilling. The three-rig program will continue
for the remainder of the year.
! Carthage continued an active drilling program with six rigs running
throughout the quarter. Rig efficiencies continue to be realized as Haley / Delaware Basin
the vertical rig program saw an average decrease of two drilling days
per well within the quarter. The horizontal drilling program ! The Anadarko/Chesapeake partnership had eight rigs running in
continues to provide encouraging results with six wells drilled to the Delaware Basin during the 2nd Qtr, with six wells spud and eight
date. wells completed.

6


Southern

South Texas Marcellus
nd st
During the 2 Qtr, the South Texas team implemented a successful ! Marcellus shale play leasing continued in the 1 Qtr in
!
new dual-completion program. Pennsylvania. Anadarko’s leasehold in the play is approximately
625,000 gross acres. In conjunction with partners, Anadarko
– EXPLORATION – anticipates drilling 5 to 10 wells in five pilot areas this year. Two
vertical wells (one in Bradford County and one in Clinton County)
nd
Maverick Basin were spud and cored during the 2 Qtr, and completions are
rd
anticipated during the 3 Qtr. In July, the second and third vertical
! In early April, Anadarko entered into a joint exploration agreement wells were spud in Bradford County.
with TXCO Resources, Inc., on its 349,000-acre lease in the area.
Two horizontal wells were spud (one each in the Pearsall and
nd
Eagleford Shale) in the 2 Qtr. and are expected to be completed in
rd
the 3 Qtr. Current Drilling

Haynesville

! We have more than 70,000 net acres, prospective for the Haynesville
shale play. Essentially all of the prospective acreage is held by
production underneath our currently producing fields in the
Carthage area and Elm Grove. Before the end of this year, we intend
to conduct three or four exploratory tests targeting the Haynesville Marcellus Shale
shale objective. Gas Fairway

7


Gulf of Mexico
LOUISIANA
TEXAS
New Orleans

Baldpate/Conger
Net Volumes Power Play
2Q08 1Q08
Nansen
MMcf/d MBbls/d MMcf/d MBbls/d
604 70
TOTAL 301 68

Boomvang
Independence
Hub
Independence Marco Polo
Hub
Gunnison Red Hawk
APC acreage
APC facilities

– PRODUCING PROPERTIES –
San Jacinto
Spiderman
Independence Hub
Mondo NW Atlas NW
Q
! In early April, a leak was discovered in the flex joint on Enterprise
Atlas Pipeline Partners’ Independence Trail pipeline, which serves as the
Merganser
export gas line from the Independence Hub facility. The platform
Vortex was immediately shut-in, and crews were mobilized to address the
leak. After removing and replacing the O-ring in the flex joint, the
Jubilee
Independence Hub platform resumed production in mid-June and
Cheyenne
quickly ramped up.

! The Cheyenne #3 well (APC 100% WI), which was drilled and
st
completed in the 1 Qtr, was tied back to the Independence Hub
nd
facility and brought on line in the 2 Qtr.

8


Gulf of Mexico

– PRODUCING PROPERTIES (CONT.) –

Power Play Nansen

Garden Banks 258/302 (APC 45% WI) East Breaks 558/602/646/689/690 (APC 50% WI)

! Anadarko’s Power Play discovery was successfully tied back and ! We continued our successful satellite program at Nansen, where we
brought on line during the 2nd Qtr. Initial production from the well was encountered pay in two wells, the EB 646 #8 Shackleton (an
exploration well) and the EB 646 #7ST (a sidetrack well).
approximately 9,000 BOE/d gross.

Gunnison
Marco Polo

Garden Banks 667/668/669 (APC 50% WI)
Green Canyon 608 (APC 100% WI)

! We successfully completed the GB 667 #2 well and tied it back to the
! On the Marco Polo platform, the A-7 well was successfully brought on
nd
line at a rate of 3,300 BOE/d gross and the A-3 well was recompleted Gunnison spar in the 2 Qtr. In addition, new zones in two existing
and brought on line at a rate of 3,350 BOE/d gross. wells – the GB 668 #9 and the GB 669 #1 – were brought on line. Total
production from the three wells is approximately 11,000 BOE/d gross.
Boomvang
Conger
East Breaks 643/642/688 (APC 30% WI)
East Breaks 598 (APC 100% WI) Garden Banks 215 (APC 25% WI)
East Breaks599 (APC 33% WI)
! Anadarko is participating in the recompletion operations of the GB
nd
215 #8 ST1 well. Completion operations are progressing and
! The East Breaks 688 #6ST well was brought on line in the 2 Qtr.
Anadarko expects the well to be on line during the 3rd Qtr.
Initial production from the well was ramped up to a rate of 46 MMcf/d
gross.

9


Gulf of Mexico
– PRODUCING PROPERTIES (CONT.) – – MAJOR DEVELOPMENT PIPELINE –

Red Hawk Caesar / Tonga Complex

Garden Banks 877 (APC 50% WI) Green Canyon 683/726/727/770 (APC 33.75% WI pending MMS
approval)
! Recompletion operations were concluded on the GB 877 #1 ST 2 well
in the 2nd Qtr. The new zone was brought on line and the well is ! Development activities at the Caesar-Tonga complex continued to
progress in the 2nd Qtr. Anadarko and its partners continued to refine
currently producing 12 MMcf/d gross.
the field development plan and spud the GC 770 #1 well in early July.
! The GB 877 #2 ST2 well watered out prematurely and is currently In addition, all partners have agreed to the unit operating plan and a
shut-in. Forward proposed plans for the wellbore include formal unitization proposal has been made to the MMS.
sidetracking to a new fault block in early 2009.
Blind Faith
! Anadarko is also currently proposing a third well (GB 877 #3) in the
field, with plans to initiate drilling operations in late 2008. The Mississippi Canyon 695/696 (APC 25% WI) – Chevron operated
prospect targets new fault blocks, with proven field pay in addition to
several new horizons. If successful, the well would be completed in ! The Blind Faith semi-submersible production platform continued
early 2009 and on line in the 2nd half of 2009. with its mooring installation and commissioning activities in the 2nd
Qtr. The eight mooring lines were successfully installed on the
facility. Operations in the 3rd Qtr involve installation and
commissioning of the flowlines and pipelines, as well as final platform
commissioning.

! Completion operations on the fourth Blind Faith well, MC 696 #5,
were finished in the 2nd Qtr. Production from the Blind Faith field is
rd th
expected either late 3 Qtr or 4 Qtr 2008.

10


Gulf of Mexico

– MAJOR DEVELOPMENT PIPELINE (CONT.) –

K2 Complex Updip of HKO
HKO to LKO
Upside
Green Canyon 561/562/605/606/518/563/607 (APC 42% WI) Undrilled Potential
Anadarko WI
Flowlines
! At the K2 complex, initial sidetracking operations finished 2008 Drilling Program
successfully on the GC 561 #2 ST1, after the downdip appraisal
penetrated the same sands previously encountered in the original
wellbore. Significant progress has also been made on the updip Marco
K2 Unit
sidetrack which provided additional data to support the pay section Polo
APC WI: 42%
extension of four new hydrocarbon-bearing sands as well as another
400 feet of downdip extension to the existing M-14 sand. The updip
lateral is anticipated to be completed as a producer and should be on
0 2
line in mid-2009. A proposal to the partners is expected to be
MILES
presented by year-end 2008 regarding the optimum enhanced oil
recovery technique for the field.

Mission Deep

Green Canyon 956 (APC 50% WI)

! Early in the 3rd Qtr, Anadarko initiated sidetrack appraisal operations
at its Mission Deep discovery. The appraisal well, GC 956 #1 ST2, is
being sidetracked approximately 1,700 feet to the east of the initial
discovery and 500 feet downdip in block 956. It is targeting the Middle
Miocene sands.

11


Gulf of Mexico
– EXPLORATION –

! Anadarko is currently drilling the Shenandoah prospect (Walker LOUISIANA
TEXAS
Ridge 8), which spud in early June. The well has a Lower Tertiary New Orleans

(Wilcox) objective and is located in 5,815 feet of water with a proposed
total depth of 31,000 feet (30,500 feet total vertical depth). Anadarko is Blind Faith
operator and holds a 30% working interest. Partners include Conoco- Tonga West Caesar
Phillips (40%), Cobalt (20%) and Marathon (10%).

! Anadarko also is participating in the Sturgis North prospect (Atwater
Vito
Valley 138), which spud in early February and has Middle and Lower
Sturgis North
Miocene targets. The well is located in 3,490 feet of water with a
K2 Complex
proposed total depth of 31,150 feet. Anadarko and partners, Chevron
Shenandoah APC acreage
(operator), Statoil-Hydro and Devon Energy each hold a 25% working
Exploratory Drilling
interest in this exploratory well. Heidelberg
Major Developments
Mission Deep
! The Vito exploration well (Mississippi Canyon 984) is scheduled to
spud late 3rd Qtr to early 4th Qtr. The well is a middle Miocene test and
has a projected total depth of 29,500 feet in 4,000 feet of water.
Anadarko is the operator with 20% working interest, along with
Statoil-Hydro (25% WI) and Shell (55% WI). Shell will operate after
the exploration well has been drilled.

! The Heidelberg exploration well (Green Canyon 859) is scheduled to
rd
spud in late 3 Qtr. The well is a Miocene target that is on-trend with
the Tonga West discovery and has a projected total depth of 28,500 feet
in 5,025-foot water depth. Anadarko holds a 44.25-percent working
interest and is the operator. Our partners in Heidelberg include
Mariner (12.5% WI), ENI (12.5% WI), Exxon (9.375% WI), Cobalt
(9.375% WI), Hydro (12.0% WI).

12


International / Frontier
Net Volumes* Capital*
2Q08 1Q08 2Q08
$ MM
MBbls/d MBbls/d
20 30
Alaska 21
51 8
Algeria 56
17 16
China 17
0 77
Other 0
88 130
TOTAL 94

– DEVELOPMENT – *Data may not add to totals due to rounding.

Alaska China

! Average gross oil production for the Colville River Unit during the 2nd ! During the 2nd Qtr, oil production averaged 46,000 Bbl/d gross from
Qtr was up slightly from the 1st Qtr at approximately 112,000 Bbl/d Bohai Bay.
gross. Five new development wells were drilled and completed during
! Development drilling continued, with four wells (two multi-laterals)
the quarter, including the first of eight wells at the new Qannik
drilled in the CFD 11-1 field during the quarter.
development.

Brazil
! Construction of the Qannik facilities has been completed and first oil
was achieved in early July, three months ahead of schedule.
! The sale of the Peregrino project is progressing towards transaction
close, which should be around year-end 2008.
Algeria

! During the quarter, oil production from the Hassi Berkine South and
the Ourhoud Central Processing Facilities was down to 419,000 Bbl/d
gross due to a planned shutdown, which was completed in mid-April.

! BKNE-B field development was approved by the Algerian
authorities. The first two wells are expected on line in the 3rd Qtr 2008.

! The El Merk project team launched the competitive FEED, and site
preparation began during the quarter.

13


– EXPLORATION –

Brazil Ghana

! We mobilized the Deepwater Millennium drillship from the Gulf of ! Plans to sanction the Jubilee Field in 2008 remain on track. Inquiries
Mexico to Brazil to carryout our exploration program. The rig is have been made in the FPSO market, and it appears that several
currently drilling the Wahoo pre-salt prospect in BM-C-30, which suitable options are available to achieve 2010 first production. Project
awards on several long-lead items are anticipated in 3rd Qtr 2008.
will be drilled to a total depth of 19,750 feet and will test several play
concepts in the pre-salt section. This prospect is a direct offset to the
announced Caxareu pre-salt discovery, where one well in this complex ! The drilling rigs Erik Raude and Blackford Dolphin are expected to
was tested for over 10,000 Bbl/d of light sweet oil. Anadarko is arrive before the end of 2008 and begin the exploration, appraisal and
operator and has a 30% working interest in the Wahoo prospect. development well drilling program. In addition, the partners have
contracted for two additional rigs to arrive in 2009.
! Following completion of operations on the Wahoo prospect, the
Millennium will re-enter the Serpa pre-salt prospect. Petrobras will ! Following the completion of drilling operations of the Mahogany #2
continue to operate the well and has procured the needed drilling well, seven miles northeast and updip from the Hyedua discovery
tools to allow completion of operations to the proposed total depth of well, the partnership performed two drillstem tests on selected
19,500 feet. As previously reported, Serpa was suspended before intervals of the 165 feet of pay sand encountered in the well. Both the
reaching the primary objective due to insufficient rig capacity. The lower and upper tests flowed at a facility constrained rate of
partnership is encouraged with the secondary sands encountered in approximately 5,000 BOE/d. The oil gravity was between 36 and 39
the pre-salt section to dates. Anadarko has a 30% working interest in degree API. In both tests, the oil was found to be high quality and
the prospect. sweet. The well will be temporarily abandoned and may be used as a
producing well in field development. We have now increased our
China estimated recoverable resources expectations to between 500
MMBOE and 1.8 BBOE in this Upper Cretaceous fan discovery.
! Anadarko acquired 900 km of 2D seismic data on deepwater Block
nd
43/11 in the South China Sea during the 2 Qtr. This acquisition
completes a 2,000 km survey, which commenced in late-2007.
Acquisition of a separate, 1,500 km 2D seismic survey should be
rd
completed in early 3 Qtr. Preparations continue for a planned 4,000-
th
meter exploratory well during the 4 Qtr 2008.

14



– EXPLORATION (CONT.) –

West Africa
Ghana Blocks
! Anadarko acquired interests in five blocks (5.1 million acres) within
the emerging West African Upper Cretaceous fan play trend. Two of
the blocks are located offshore Sierra Leone. Anadarko will operate
these blocks with a 50% working interest. The other three blocks are
located offshore Liberia. Anadarko will operate these blocks with a
65% working interest. Current expectations are to drill a well in Sierra
2
Leone in 2009 and commence a 4,700 km 3D seismic shoot in Liberia
in early 2009. Partners in all five blocks will be Repsol and Woodside.

Indonesia

! In the Bukat block in the Tarakan Basin, Anadarko participated in a
2
multi-azimuth 3D survey over the Aster Field (420 km ) and an 1,800
2 nd
km 3D in the deepwater fold belt region of the block during the 2
Qtr.

Sierra Leone / Liberia Blocks
! Anadarko elected to divest its 51% interest in the onshore BungaMas
PSC located in South Sumatra to focus attention and investment on
the offshore and deepwater portfolio, where the company operates
four blocks and is a partner in two additional blocks.

15

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