anadarko petroleum 2Q08 Operations Report

Investor Relations:

John ColglazierVice [email protected]

Chris Campbell, [email protected]

Danny [email protected]

Operations Report2008 ANADARKO PETROLEUM CORPORATION

Second Quarter

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

NYSE:APC www.anadarko.com 2

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.


Overview


– RIG ACTIVITY –

– CAPITAL SPENDING –

– VOLUMES –

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The capital program totaled $1,232 million during the quarter, of 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 approximately 20% allocated to exploration.

ndSales volumes for the 2 Qtr were 50 MMBOE, which was within guidance (50-52 MMBOE), despite more than eight weeks of shut-in production at Independence Hub.

Rockies

Southern

LOWER 48

Alaska

Gulf of Mexico

TOTAL U.S.

INTERNATIONAL

Midstream

Capitalized Items / Other

TOTAL COMPANY

2Q08

$ MM

338

272

609

30

289

928

100

133

71

1,232

1Q08

$ MM

Capital Spending*

308

189

497

31

255

784

102

133

38

1,056

Rockies

Southern

LOWER 48

Alaska

Gulf of Mexico

TOTAL U.S.

INTERNATIONAL

TOTAL COMPANY

Total

74

33

107

2

9

118

8

126

Non-Operated

2Q08 Rig Activity

52

8

60

1

4

65

5

70

Operated

22

25

47

1

5

53

3

56

2Q08 1Q08 2Q07** vs. 1Q08

Net Volumes (MMBOE)*

Rockies

Southern

LOWER 48

Alaska

Gulf of Mexico

TOTAL U.S.

INTERNATIONAL

TOTAL COMPANY

16

12

28

2

10

40

7

47

2Q08

% Change

19

11

30

2

11

43

7

50

5%

1%

4%

4%

-30%

-7%

8%

-5%

19

11

29

2

15

46

6

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

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

vs. 2Q07

20%

-7%

8%

-17%

12%

8%

-4%

6%



Rockies

Monell

HelperWattenberg

Atlantic Rim

GreaterNatural Buttes

Pinedale

Wamsutter

Salt Creek

Powder River CBM

Tight Gas CBMEOR

MonellMoxa

WYOMING

UTAH COLORADO

TIGHT GAS

Wattenberg

Pinedale

Wamsutter

Other

CBM

EOR

TOTAL

Natural Buttes

2Q08

$ MM

Capital*

MMcf/d MBbls/dMMcf/d MBbls/d

1Q082Q08

Net Volumes*

101

84

39

24

17

37

36

338

240

174

73

70

68

379

4

1,008

4

19

1

7

4

0

12

46

219

165

69

83

84

348

3

970

3

17

1

8

5

-1

11

45

Oper. Non-Op. Expl. Dev.

2Q082Q08

Rig Activity Completed WellsGross

8

7

0

1

1

4

1

22

3

1

26

9

6

7

0

52

0

0

0

0

0

0

0

0

67

120

54

10

40

11

10

312

– TIGHT GAS DEVELOPMENT –

Greater Natural Buttes

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Natural Buttes achieved another great quarter – growing volumes st th

10% from 1 Qtr and 35% from 4 Qtr 2007, with a new single-day, gross-operated production record of 304 MMcf/d.

The Chipeta plant is now running at full capacity, processing 270 MMcf/d and increasing NGL production to 3,000 Bbl/d.

ndMore than 50 wells were completed in the 2 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.

*Data may not add to totals due to rounding.


Rockies


Wattenberg

Moxa

Wamsutter

Pinedale

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nd At Monell, we recently completed a 10-well pilot drilling program to In the 2 Qtr, Anadarko drilled a company-record 83 wells and evaluate the results of greater well density in existing CO flood performed 227 fracs. Two additional rigs were mobilized in June. The 2

ramp-up program is on pace to drill more than 350 wells this year – a patterns.50% increase from 2007.

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-ndalso set a gross-operated sales record of 200 MMcf/d during the operated rigs. Through the end of the 2 Qtr, the company spud 11

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 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-

ndprovide significant system capacity for future Big George operated rigs. Through the end of the 2 Qtr, the company spud 12 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 1.3 Bcf/d.

Anadarko continues to participate in an active program with 27 rigs currently running in the Pinedale area. Along with our partners, Ultra, Questar and Shell, Anadarko spud 128 wells and completed 88

ndSalt Creek Phase 5 was commissioned and CO injection commenced wells through the end of the 2 Qtr.2ndduring the 2 Qtr. Construction for Phase 6 is ongoing and expected to

be complete at year end.

– GREATER GREEN RIVER BASIN –– COALBED METHANE DEVELOPMENT –

– ENHANCED OIL RECOVERY –


Southern

CarthageBossierEast Chalk

South Texas

Haley

Ozona

Tight Gas

Fractured Reservoirs

Other

Hugoton

Maverick

MarcellusShale


Haley

Ozona

Mid-Continent

Bossier

Carthage

Chalk

S. Texas / Other

TOTAL

2Q08

$ MM Oper. Non-Op Expl. Dev.

2Q082Q08

Capital* Rig Activity Completed WellsGross


1Q082Q08

Net Volumes*

60

4

3

27

56

61

62

272

6

1

0

2

5

7

4

25

2

0

0

1

0

1

4

8

0

0

0

0

0

0

0

0

8

14

0

4

29

6

25

86

84

41

59

156

82

44

92

557

0

1

1

0

5

12

5

24

101

40

59

153

81

39

91

563

0

1

1

0

5

12

4

24

East Chalk

Freestone

Carthage

Haley / Delaware Basin

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On May 31, 2008, East Chalk reached record gas production of 100 ndMMcf/d gross. By the end of the 2 Qtr, the East Chalk drilling

program had ramped up to seven operated rigs.

The Bossier asset team continued to execute a successful program, completing three operated wells during the quarter. In early July, an 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 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

ndcontinues to provide encouraging results with six wells drilled to the Delaware Basin during the 2 Qtr, with six wells spud and eight date. wells completed.



Southern


Marcellus ShaleGas Fairway

Current Drilling

South Texas Marcellus

Maverick Basin

Haynesville

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nd stDuring 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 anticipates drilling 5 to 10 wells in five pilot areas this year. Two vertical wells (one in Bradford County and one in Clinton County)

ndwere spud and cored during the 2 Qtr, and completions are

rdanticipated 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

ndEagleford Shale) in the 2 Qtr. and are expected to be completed in

rdthe 3 Qtr.

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 shale objective.

– EXPLORATION –



Gulf of Mexico

T E X A S L O U I S I A N ANew Orleans

IndependenceHub

Marco Polo

Baldpate/Conger

Nansen

APC acreage

APC facilities

Gunnison

Boomvang

Power Play

Jubilee

Vortex

Mondo NW Atlas NW

Atlas

Cheyenne

SpidermanSan Jacinto

Q

Merganser

Jubilee

Vortex

Mondo NW Atlas NW

Atlas

Cheyenne

SpidermanSan Jacinto

Q

Merganser

IndependenceHub

Red Hawk

– PRODUCING PROPERTIES –

Independence Hub

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In early April, a leak was discovered in the flex joint on Enterprise Pipeline Partners’ Independence Trail pipeline, which serves as the export gas line from the Independence Hub facility. The platform was immediately shut-in, and crews were mobilized to address the leak. After removing and replacing the O-ring in the flex joint, the Independence Hub platform resumed production in mid-June and 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.


1Q082Q08

Net Volumes

TOTAL 301 68 604 70


Gulf of Mexico


– PRODUCING PROPERTIES (CONT.) –

Power Play Nansen

Marco Polo Gunnison

Boomvang Conger

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 ndbrought on line during the 2 Qtr. Initial production from the well was encountered pay in two wells, the EB 646 #8 Shackleton (an

approximately 9,000 BOE/d gross. exploration well) and the EB 646 #7ST (a sidetrack well).

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

On the Marco Polo platform, the A-7 well was successfully brought on We successfully completed the GB 667 #2 well and tied it back to the 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.

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.

rdInitial production from the well was ramped up to a rate of 46 MMcf/d Anadarko expects the well to be on line during the 3 Qtr.gross.

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Gulf of Mexico


– PRODUCING PROPERTIES (CONT.) – – MAJOR DEVELOPMENT PIPELINE –

Red Hawk Caesar / Tonga Complex

Blind Faith

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 ndin the 2 Qtr. The new zone was brought on line and the well is Development activities at the Caesar-Tonga complex continued to

ndcurrently producing 12 MMcf/d gross. progress in the 2 Qtr. Anadarko and its partners continued to refine 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.

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 operatedprospect 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

nd ndearly 2009 and on line in the 2 half of 2009. with its mooring installation and commissioning activities in the 2

Qtr. The eight mooring lines were successfully installed on the rdfacility. Operations in the 3 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, ndwere finished in the 2 Qtr. Production from the Blind Faith field is

rd thexpected either late 3 Qtr or 4 Qtr 2008.

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Gulf of Mexico


Updip of HKO

HKO to LKO

Upside

Undrilled Potential

Anadarko WI

Flowlines

2008 Drilling Program

K2 UnitAPC WI: 42%

MarcoPolo

20

MILES

– MAJOR DEVELOPMENT PIPELINE (CONT.) –

K2 Complex

Mission Deep

Green Canyon 561/562/605/606/518/563/607 (APC 42% WI)

At the K2 complex, initial sidetracking operations finished 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 sidetrack which provided additional data to support the pay section 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 line in mid-2009. A proposal to the partners is expected to be presented by year-end 2008 regarding the optimum enhanced oil recovery technique for the field.

Green Canyon 956 (APC 50% WI)

rdEarly in the 3 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.

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Gulf of Mexico


T E X A S L O U I S I A N ANew Orleans

Tonga West

Sturgis North

Blind Faith

APC acreage

Exploratory Drilling

Major Developments

Caesar

Shenandoah

Vito

Heidelberg

K2 Complex

Mission Deep

– EXPLORATION –

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Anadarko is currently drilling the Shenandoah prospect (Walker Ridge 8), which spud in early June. The well has a Lower Tertiary (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 operator and holds a 30% working interest. Partners include Conoco-Phillips (40%), Cobalt (20%) and Marathon (10%).

Anadarko also is participating in the Sturgis North prospect (Atwater Valley 138), which spud in early February and has Middle and Lower Miocene targets. The well is located in 3,490 feet of water with a proposed total depth of 31,150 feet. Anadarko and partners, Chevron (operator), Statoil-Hydro and Devon Energy each hold a 25% working interest in this exploratory well.

The Vito exploration well (Mississippi Canyon 984) is scheduled to rd thspud late 3 Qtr to early 4 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).



International / Frontier

2Q08

$ MM

Capital*

MBbls/dMBbls/d

1Q082Q08

Net Volumes*

Alaska

Algeria

China

Other

TOTAL

21

56

17

0

94

20

51

17

0

88

– DEVELOPMENT –

Alaska China

Brazil

Algeria

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nd ndAverage gross oil production for the Colville River Unit during the 2 During the 2 Qtr, oil production averaged 46,000 Bbl/d gross from

stQtr was up slightly from the 1 Qtr at approximately 112,000 Bbl/d Bohai Bay.gross. Five new development wells were drilled and completed during the quarter, including the first of eight wells at the new Qannik Development drilling continued, with four wells (two multi-laterals) development. drilled in the CFD 11-1 field during the quarter.

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.

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 rdauthorities. The first two wells are expected on line in the 3 Qtr 2008.

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

30

8

16

77

130





– EXPLORATION –

Brazil Ghana

China

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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

rdwill be drilled to a total depth of 19,750 feet and will test several play awards on several long-lead items are anticipated in 3 Qtr 2008.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 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

rdcompleted in early 3 Qtr. Preparations continue for a planned 4,000-

thmeter exploratory well during the 4 Qtr 2008.




Ghana Blocks

Sierra Leone / Liberia Blocks

– EXPLORATION (CONT.) –

West Africa

Indonesia

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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

2Leone 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.

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.

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.

anadarko petroleum 2Q08 Operations Report

Economy & Finance

anadarko annual report

actual results anadarko

anadarko secs guidelines

2q07 volumes

great quarter growing

operations report

divested volumes

sales volumes