The worst may be over for Anadarko, Deutsche Bank says


Investors have been worried that Anadarko (APC +0.2%) might have more risks following the surprise ruling that it could be liable for as much as $14.2B related to its 2006 acquisition of Kerr-McGee, but Deutsche Bank says fears largely are unwarranted, with the worst case outcome now understood and risked by the market.

The long-term is mostly positive, the firm writes, as APC "likely comes out of Tronox in a more aggressive monetization/value realization mode with the market focused on NAV upside and improving operating trends in 2014."

APC trades at 5.4x 2014 EV/debt-adjusted cash flow vs. 6.4x for its average competitor; EOG Resources (EOG) trades at 7.1x, Noble Energy (NBL) at 8.7x times and Chesapeake Energy (CHK) at 7.3x.

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Comments (1)
  • j colin kelly
    , contributor
    Comment (1) | Send Message
     
    How does Deutsche Bank value the prospective liability? From reading the opinion I would surmise that AP would do well to settle for six to eight billion dollars. If APC appeals, the interest clock will be running at the legal rate further compounding APC's risks if APC loses on appeal. Plus there is something called a bond that cost money in the event of an appeal. APC's former management and their outside lawyers concocted an indefensible scheme that harmed shareholders like me. Wall Street understated a prospective liability that also misled investors.
    11 Jan 2014, 01:14 PM Reply Like
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