Source: Anadarko Petroleum

Oil and gas major Anadarko Petroleum (APC) is one of the world's largest independent exploration and production companies, with approximately 2.79 billion barrels of oil equivalents in proved reserves at the end of last year. As Anadarko heads into 2014, the key question for investors is how the company will invest capital to set itself up for profits this year and beyond.

Interestingly, there's a clear divergence between Anadarko's capital spending plan in terms of product focus and geography. It's plowing heavily into domestic onshore production, particularly in oil, while shying away from natural gas and deep-water development this year.

Here are the key takeaways from Anadarko's recently released 2014 capital program and guidance.

Going long on U.S. oil
In all, Anadarko plans to invest between $8.1 billion-$8.5 billion this year, excluding investments associated with Western Gas Partners, LP (WES 0.95%). Western Gas Partners is a separate publicly traded business that is wholly controlled by Anadarko.

The level of Anadarko's planned spending this year is about on par with last year's capital expenditures, which totaled approximately $8.5 billion. Anadarko is firmly keeping a lid on spending this year, which is a common theme throughout the independent exploration and production majors.

For example, independent industry leader ConocoPhillips (COP 1.75%) is tightening its belt this year as well. It expects to utilize $16.7 billion in capital expenditures in 2014, which represents only a fractional increase from last year's expenditure levels.

It's clear from Anadarko's capital budget that it's making a big bet on domestic energy, particularly oil production, which is something it has in common with its close peer ConocoPhillips. A full 60% of the company's capital expenditures will be allocated toward onshore production in the United States. Of this, more than 80% of its U.S. onshore investments will be focused on oil and liquids-rich opportunities.

Like Anadarko, ConocoPhillips plans to increase domestic investment, at its Eagle Ford, Bakken, and Permian Basin operations, where it's already hugely successful. Those three onshore developments collectively grew production by 31% in the fourth quarter of 2013, year over year.

Anadarko is devoting lots of resources to oil production at several promising fields, and at the same time, isn't giving much attention to natural gas production this year. This could be because Anadarko's top-performing oil fields are extremely promising and production potential is too good to ignore. Of primary focus are the two onshore fields that are most important to Anadarko's production growth, which are the Wattenberg Horizontal program in Colorado and its Eagle Ford shale play in South Texas.

Anadarko considers its Wattenberg position to be of critical importance not just for this year's production, but for its future production potential as well. That's because the Wattenberg play generates the strongest returns in its entire U.S. onshore portfolio and the company is counting on continued significant growth this year.

Anadarko is rapidly building out its infrastructure there to eventually reach 13 operating rigs during the year that will involve more than 360 drilled wells. In all, the goal is to increase companywide oil production by 40,000 barrels per day, or roughly 6%-7% sales volume growth on a percentage basis.

The Foolish takewaway
Anadarko has the potential for strong performance this year, as a result of its significant production growth combined with supportive commodity prices. With $100 per barrel oil in the United States and increasing production from several promising sites such as the Wattenberg Horizontal program and the Eagle Ford shale, Anadarko could reward shareholders handsomely this year.

Interestingly, Anadarko is committing the vast majority of its investments this year to oil production, particularly in the United States. It's shying away from both deep-water production and natural gas this year. If its domestic oil fields produce as expected and oil prices continue to rise, Anadarko's strategic bets could pay off hugely this year.