Will the Gulf Moratorium Cripple the Industry?

Both industry insiders and investors are trying to figure out how much the announced drilling moratorium in the Gulf of Mexico will affect their businesses. According to Anadarko Petroleum (NYSE: APC), the answer is not very much.

Anadarko is a 25% owner of the Macondo well that's flooding the gulf with oil after Transocean's (NYSE: RIG) Deepwater Horizon rig sank in a ball of flaming glory. While lead operator BP (NYSE: BP) has received the most public flogging, Anadarko shares have also taken a massive hit, dropping 40% since the crises started on April 20.

Today, however, shares are up as the company reaffirmed its both its sales volume and capital spending estimates for the year. As CEO Jim Hackett stated:

"We want to assure our stakeholders that we expect to meet our 2010 production targets and have already taken a number of actions to protect the value of our portfolio during the moratorium in the Gulf. Although our Gulf of Mexico drilling activity has been suspended due to the moratorium, we are evaluating opportunities to reallocate some of the 2010 capital from the Gulf to other areas of our global portfolio, including our numerous onshore liquids-rich opportunities, and we remain committed to our worldwide exploration, appraisal and development programs."

"Liquids-rich opportunities" likely means the Eagle Ford shale play, where Anadarko has 400,000 acres leased, including some with joint-venture partner St. Mary Land & Exploration (NYSE: SM).

The shift to onshore resources is hardly surprising. Shell's (NYSE: RDS-A) $4.7 billion purchase of shale assets comes after fellow super-major ExxonMobil's (NYSE: XOM) $41 billion buyout of XTO Energy (NYSE: XTO). The real question is whether the well-capitalized heavyweights of the industry are happy putting additional capital expenditures into the leasehold they currently have, or are looking to use their downtime in the Gulf to take out some mid-size shale players.