Anadarko Petroleum (APC) isn't a company that will rest on its laurels. Although it might possibly have the best portfolio of international projects of any major U.S. energy exploration company, it still must keep moving forward.
Although the company hit a massive jackpot with its find off the coast of Mozambique, which may just yield 60 trillion cubic feet of natural gas, worth $30 billion to $60 billion, that is still no reason to stop pushing the envelope. Of course, that is exactly what Anadarko is doing-pushing the envelope and pushing it hard.
The company is shrewd in its business dealings, being careful with financing and partnerships. Earlier this year the company sold a 7.2% interest in the Gulf of Mexico Lucius field for $556 million, placing a value of about $2 billion on its remaining stake of 27.8%. The deal will help to offset its capital costs for Lucius that comes with development of oil production in 7,200 feet of water about 230 miles from the coast.
The Lucius oil and gas field is shared between Exxon Mobil (XOM), with 15%, Apache (APA) with 11.7% and Petrobras Argentina (PZE) with 9.6%, as well as a couple of others. Exxon Mobil has also been careful where it invests. The company is tiptoeing around an Afghanistan deal in the Afghan Tajik basin that it had first shown interest in. Security concerns is said to be one of the probable reasons. Apache has its tentacles reaching in a numerous regions of the world including the Permian Basin of West Texas, Egypt, New Mexico, and Alberta and British Columbia. The company also purchased some 158 blocks off the coast of Alabama, Louisiana and Texas from Devon Energy (DVN). Devon Energy continues to test new plays in the Utica, the Mississippian and the Tuscaloosa Marine Shale. The company forecasts 680,000 to 690,000 BOE of production in the third quarter and continues to see success in the Barnett Shale play.
Pertobras Argentina, in addition to oil and gas exploration and production, operates refineries that produce gasoline, diesel oil, fuel oil, asphalts and liquefied gases. In the Lucius play, Anadarko is sitting pretty with a 27.8% interest in a project expected to generate 80,000 barrels of oil and 450 million cubic feet of natural gas a day. In addition to successful plays in the U.S., Anadarko has investments in China, Mozambique, South Africa, Kenya, West Africa, Ghana and Algeria. I believe this company to be a solid buy right now. The fact that it continues to make smart moves and yes, even gets lucky from time to time, this is one to keep for the long haul.
Anadarko weighs decisions regarding new plays and the selling of assets very carefully. The company will even change its mind about a transaction if further study revealed it to not be a good decision at the time. It recently decided not to sell its Brazilian assets and putting the deal in a holding pattern for now. When the company first put forth the sale, companies such as Total (TOT) and Statoil (STO) had shown interest in buying the assets valued at more than $3 billion. Total operates as a worldwide integrated oil and gas company. The company was recently part of a $1.65 billion deal signing with three other oil companies to perform offshore exploration for the Uruguay government. Statoil had paid $419 million contingency payment to Anadarko related to the 2008 sale of Anadarko's stake in the Peregrino oilfield offshore Brazil. The company had paid $1.8 billion for stakes in heavy-oil and deep-water projects in Brazil and the Gulf of Mexico, including the 50% interest it didn't already hold in the Brazilian Peregrino project. It was just five years ago that Brazil was seen as the largest attraction in the oil industry when it was discovered that vast quantities of oil lay just under a thick layer of salt in the Atlantic. Exxon Mobil and others have left the scene disappointed after drilling some dry holes. But not everyone is leaving.
However, Petroleo Brasileiro recently received approval to acquire a 30% stake in an offshore block in Anadarko Brazilian's stake. Anadarko had relinquished its stake in the ES-M-661 block, which is located 36 miles off the coast of Espirito Santo state where Petrobras found heavy oil this past July, to focus more on its assets in the Campos Basin. Petroleo Brasileiro recently announced that it has completed the drilling of the fourth well in the pre-salt Santos Basin in the Cessao Onerosa area. Petroleo Brasileiro has a market cap of $153.53 billion and primarily engages in oil and natural gas exploration and production.
In July, the company reported second quarter 2012 earnings of 0.85 per share, under-performing last year's second quarter results by 25.44%. Anadarko had second quarter 2012 revenues of $3.22 billion, 6.53% below the prior year's second quarter results, but revenues for the full year 2011 of $13.97 billion, 27.16% above the prior year's results. The financials do not completely reflect the headway the company is making. Anadarko is making great gains in many regions of the world. With potential success in plays in Africa, the Rockies, Pennsylvania, Brazil, the Gulf of Mexico and others, it is plain to see that this is a company to invest in for long-term growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.