Anadarko Petroleum: New Exploration Opportunities Are Set To Unfold

Buy-recommended Anadarko Petroleum (APC) offers unlevered appreciation potential of 25% to estimated net present value [NPV] of $74 a share, revised up from $70 a share on May 29 when we raised long-term oil price to $66 a barrel from $60.

Second quarter results reported at 8:00 pm Eastern Time on July 30 disclosed higher than expected unlevered cash flow (Ebitda) including properties that have since been divested. Concentrated 53/44 on natural gas and oil production, respectively, NPV for the large cap stock looks low compared to our estimates for some thirty other producers.

The high financial risk phase in the company’s transition is mostly completed while the new opportunities in the Gulf of Mexico and the Rocky Mountains are set to unfold. Currently above $8 a million btu and at $71 a barrel, long-term natural gas and oil price appear to be in uptrends despite volatility of short-term quotes.

Finally, APC stock also has positive momentum as it trades above its 200-day average.

Originally published on July 31, 2007.

APC 1-yr chart: