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by Amine Bouchentouf

American oil exploration and production firm has put its dark days behind it.

Anadarko (NYSE:APC) is one of those rare breeds of petroleum companies: a U.S.-based independent exploration and production company with a diverse and growing portfolio of international assets that generate incredible growth.

It is no secret that the vast majority of American independent E&P companies have been drastically scaling back their international operations, and selling and divesting assets in jurisdictions such as Africa, Asia and Latin America in order to focus on producing assets back home-assets in North Dakota's Bakken, in the Gulf of Mexico and other areas where the fracking revolution has made possible extraction of hydrocarbons in a way never seen before.

Anadarko, headquartered in Texas, has actually been increasing its ownership of foreign assets, and with extremely positive results. Global output is up more than 15 percent this year, and the company has been increasing its dividend, a sure sign of its commitment to give back cash to shareholders.

APC

This is a very different company from the one just a few years ago, which was forced to pay almost $10 billion to settle a legal settlement. In this report, we look at the new Anadarko and whether it can be a valuable addition to your portfolio.

Change Of Fortunes

Only three years ago, many in the press were writing Anadarko's obituary. And indeed, those were dark days. APC was involved, alongside BP (NYSE:BP), in the biggest oil spill in history when the Macondo well in the Gulf of Mexico blew underwater.

Anadarko held 25 percent of the offshore block and was therefore held responsible both financially and legally for the oil spill. All in all, the company paid approximately $10 billion to settle the case, which included a multibillion-dollar punitive payment to the Justice Department.

Very few companies can come back from a legal bill that costly, especially considering the reputational damage the company suffered in the marketplace. However, Anadarko successfully put these dark days behind it and is now one of the high-flying stocks in the market today.

The common stock is up a staggering 39 percent year-to-date, driven by extremely solid operational and financial results.

Performance Based On Strong Growth

Anadarko is fairly unique among U.S. companies because it is an American independent that mirrors the geographic footprint of the majors. It has operations in the Marcellus shale, in the deep water Gulf of Mexico and the Eagle Ford in Texas. In addition, it also has producing assets in countries such as New Zealand and Brazil.

Among American independents, Anadarko is leading the charge in investments in African upstream oil and gas. While many American companies are divesting their African assets (such as ConocoPhillips (NYSE:COP), APC is doubling down on the continent. A few years back, the company's investments in offshore Ghana paid off handsomely, as oil was discovered in the monster Jubilee field.

In Algeria, the company has been present for more than 25 years. This year saw a jump of almost 20 percent in Algerian daily output. This is helping the bottom line significantly. Furthermore, APC is now becoming extremely active in Mozambique, where it is pumping more than $1 billion into the country to develop oil and natural gas assets.

A Strong Buy?

Anadarko came back from very dark days only three years ago to become a juggernaut in the E&P sector. There are many reasons I like the company; specifically, its diverse mix of assets, disciplined management team, strong execution strategy and commitment to creating shareholder value.

The stock is up almost 40 percent this year on the back of very robust operational performance (15 percent performance increase in output) and financial results (more than 10 percent increase in earnings).

My main concern is that the company's growth will slow down. However, with several major developments in the pipeline, it looks as if Anadarko will be able to maintain its strong growth trajectory. And the fact that it is committed to increasing dividends to shareholders leads us to believe the company will continue rewarding shareholders who have stuck with it.

At this stage, I would prefer to bet on the company and its management team than against it. Its very strong asset base with a very strong execution strategy leads me to believe this is a strong buy.

Disclosure: The author doesn't have any positions in the stocks mentioned.

Source: The Commodity Investor: Why Anadarko Petroleum Is A Strong Buy