First quarter 2007 results reported at 9:00 pm Eastern Time on April 30 support estimated
unlevered present value for buy-recommended Anadarko Petroleum (APC) while we adjust net present value [NPV] to $70 a share from $75 a share as Debt/Present Value declines to 0.39 from 0.44.
A leading resource position in the deep water Gulf of Mexico supports estimated NPV that otherwise looks high considering a correlation with reserve life and cash flow for some thirty companies. High-tax Algeria accounted for 9% of weighted oil equivalent reserves at year end before 2007 asset sales.
The drop in Debt/Present Value confirms that Chief Executive Jim Hackett has gotten past the most vulnerable time in reshaping the company with large acquisitions and divestitures. Prospects have become more appealing since natural gas for delivery over the next six years, priced currently at $8.30 a million Btu, resumed an uptrend by crossing above the 40-week average in recent weeks.
Back above the 200-day average price signifying a stock currently in favor, APC has a full unlevered weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.
Originally published on May 1, 2007
APC 1-yr chart: