Things are looking up for Anadarko Petroleum (APC), as it may soon receive approval for a Utah natural gas project.
The company's $10 billion natural gas project that it hopes to begin in Utah's Greater Natural Buttes area is soon to receive U.S. Interior Department approval to go ahead. At first, it seemed that this project wouldn't garner approval, as there are a number of wilderness-quality lands in the area. The company made the proposal as long ago as 2006, but a number of setbacks have kept the project from getting this go ahead. However, an agreement between Anadarko and the government appears to be imminent, and the project could begin very soon. The 3,500 wells that the company hopes to build will boost revenue as it continues to supply both gas and liquid petroleum. When the project is approved, the company will be in a position to significantly increase its profits over the next few years. The project will also be a significant source of job creation. In addition, it will lead to lower energy costs for those people living in Utah.
This project will mark a huge milestone for the company as it will allow it to begin drilling operations in areas of the state that have not previously been explored. The company itself describes the project as a "new model for prudent development". The chances are high that the company will be in a position to be a leader in this part of the world in terms of petroleum reserves. The investment is huge, so the question that stockholders need to ask themselves is whether or not it will be worth it in the long run.
In line with the Obama Administration pledge (to increase gas production while limiting the impact on the environment) the company is required to meet certain construction standards with its new wells. It will be required to list chemicals used in the liquid mix forced underground as well as recycle water and reduce pollution.
An Anadarko competitor, Chevron (CVX), has been in the news recently for mixed reasons. The company is battling a court case for a spill in Brazil on one hand, while at the same time introducing new deep sea drilling technology that may be the answer to avoiding spills such as the one in the Gulf of Mexico. For stockholders, it may be necessary to simply wait and see what happens. The real question is whether the good news will outweigh the bad in the long run and keep the stock strong.
BP (BP) is also attempting to redeem itself in terms of its part in that Gulf of Mexico oil spill by inventing a system which is more effective at capping the oil flow from damaged deep-water wells. This is a direct response to the problem it faced during the spill, and a commitment to produce technology that will help prevent that catastrophe again. This invention came at just the right time for the company which is the subject of renewed outrage due to pictures that were not previously released to the public. The pictures give me the idea that the effects of the spill, especially on the marine life in the area, were far worse than we were let to know at the time.
Marathon Oil (MRO), another competitor, may be kicking itself right now for its spin-off idea last year. The company sold off its refining and marketing business, establish a new company in Marathon Petroleum (MPC), which has now grown bigger than its former parent. Marathon Oil's profits slid 58% last quarter, as Marathon Petroleum was named the 31st largest company on Forbes annual list. Look for Marathon Oil to make a move back to the top and for some new investors to flock to the lower price.
Exxon Mobil (XOM) recently regained the top spot on Forbes' Fortune 500 list. The company, though, may be facing a rush of bad publicity soon as a new book Private Empire is released to stores. The book details previously unknown anecdotes of Exxon Mobil using its money to wield power in the US Government and across the world. Needless to say, the book doesn't paint the company in good color. Exxon Mobil has never had a squeaky clean image, so fighting bad publicity is nothing new. It will, however, still be a distraction, and if the book gains in popularity, a rather big distraction at that. Look for Exxon to maybe stay silent in the near future, allowing some other companies, like Anadarko, to hog some spotlight.
Finally, Statoil ASA (STO) and Rosneft (RSNFTF.PK) have decided to "jointly explore offshore frontier areas of Russia and Norway and to conduct joint technical studies on two onshore Russian assets", which means that both companies are likely to begin profiting very soon from the increased development in the area. The agreement between the two companies, which was signed in the presence of Russian president Vladimir Putin, is a great milestone for Statoil which will now be able to increase its activities in the area. Statoil will hold 33.33% of all of the ventures that will henceforth be embarked upon.
Anadarko's recent approval to dig in Utah will be a huge step for the company in 2012. With so much turmoil surrounding its competitors, Anadarko has managed to stay out of the courtrooms and into the negotiated tables. This project, almost 6 years in the making, could be a huge boost for the company's supply and production.
Look for Anadarko to rise as the project moves forward. Any success it finds in the new drilling should only keep the good news rolling in. Setbacks may certainly come though, so keep an eye on those.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
