Anadarko Petroleum: Moderate Potential Upside But Strong Growth Prospects
Caiman Valores • 10 Comments
Caiman Valores • 10 Comments
Tue, Apr. 19, 7:17 PM
- The risk-reward balance for select oil and gas stocks that emphasize balance sheet quality resilient 2016 production profiles looks "increasingly compelling" for long-term investors, Morgan Stanley analysts say.
- Stanley maintains a "balanced" view for 2016 in a second consecutive trough year, but the longer-term outlook grows more compelling; in each of the firm's recovery scenarios, the upside to net asset value reflects the commodity price required to deliver the call on U.S. production in 2019, and is ~166%, 107%, and 40% in its respective bull, base and bear cases.
- The firm's Overweight-rated E&P stocks are Anadarko Petroleum (NYSE:APC), Cimarex Energy (NYSE:XEC), Continental Resources (NYSE:CLR), Devon Energy (NYSE:DVN), Diamondback Energy (NASDAQ:FANG), Noble Energy (NYSE:NBL), Occidental Petroleum (NYSE:OXY) and Pioneer Natural Resources (NYSE:PXD).
- Now read Devon Energy +5% following Morgan Stanley upgrade
Mon, Apr. 18, 6:53 PM
- Moody's (NYSE:MCO) has emerged as a new problem for energy companies, as the bond rater has deprived 19 energy companies of their investment-grade ratings this year, and has dropped some by several notches into the deeper reaches of junk territory, WSJ reports.
- At the same time, Standard & Poor’s rates only four of the 19 companies that lost an investment-grade rating at Moody’s as below investment grade, while Fitch rates just two below investment grade.
- So far, the market has largely shaken off the Moody’s reassessment of the oil sector; for example, Anadarko Petroleum (NYSE:APC) was cut by Moody's to junk status but still managed to raise large sums in the bond market last month at favorable terms vs. what it would have needed to pay a month earlier.
- Nevertheless, companies that Moody’s has dropped to junk are in a vulnerable position because they need investment-grade ratings from two of the three ratings firms to remain in the Barclays investment-grade corporate bond index and thus retain access to a large pool of investors that are not allowed to invest in bonds outside of the index.
- Among other oil companies Moody's has downgraded this year: ECA, ENLK, ESV, CVE, MUR
Mon, Apr. 18, 10:25 AM
- The energy sector (XLE +0.1%) pokes into the green as crude oil prices pare earlier losses even after the collapse of the Doha meeting, and it's a mixed bag among the top global oil companies in early trading: XOM +0.1%, CVX +0.3%, RDS.A -0.9%, BP -0.3%, TOT -0.4%.
- Kuwait may have achieved what Doha failed to do, at least in the short term, as a labor strike that began Sunday has cut the country's production by 60%, shuttering 1.7M bbl/day, slightly more than H1's global surplus that caused prices drop to a 12-year low in January.
- Some oil analysts say the lack of a Doha deal is better for oil prices in the long run now that the rebalancing process of supply and demand can continue to its natural conclusion.
- Other noteworthy names: KMI -0.1%, CHK -4%, MRO -1.4%, COP +0.1%, SLB +0.2%, HAL +0.2%, BHI -0.7%, OXY +0.5%, APC -0.1%, HES +0.6%, ENB +0.8%, ETP -0.4%, EPD +1.5%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN
- Now read No deal! Our 'enfant terrible' Saudi Arabia did it again
Fri, Apr. 15, 12:29 PM
- J.P. Morgan analysts revises ratings on several large-cap E&P companies following the six-week 71% rally of E&P equities in its coverage
- The firm upgrades Anadarko Petroleum (APC +0.3%) to Overweight from Neutral based on an attractive relative valuation, a resilient production profile and improved balance sheet, and upgrades Antero Resources (AR +0.9%) to Neutral from Underweight on strong PDP reserve growth and expectations of continued strong operating momentum through 2017.
- Meanwhile, JPM downgrades Southwestern Energy (SWN -0.4%) to Underweight from Neutral and EP Energy (EPE +0.4%) to Neutral from Overweight on valuation metrics.
- The firm also thinks further successful delineation of the emerging STACK play in Oklahoma could support a relative re-rating in Continental Resources (CLR -0.1%) and Devon Energy (DVN -0.3%) shares, as drilling returns in the oil window are among the highest in U.S.
- JPM's top natural gas pick remains EQT Corp. (EQT -0.4%) given differentiated growth, a strong balance sheet, noteworthy catalysts and attractive valuation.
- Now read Why Anadarko Petroleum is the best bet in a challenging oil market
Thu, Apr. 7, 2:26 PM
- Goldman Sachs says crude oil at $35/bbl is the Goldilocks ideal - priced neither too high nor too low but just right - to make shares of U.S. explorers worth buying, suggesting investors and use volatility to add to positions of shale productivity winners.
- The $30-$35 range should keep behavior of U.S. oil producers unchanged and accommodate $55-$60 oil in 2017, Goldman says, providing opportunity for equities, while a near-term rally to $45-$50 oil would reduce 2017 upside but still be favorable for equities, at least temporarily.
- Goldman says it favors "secular productivity winners" EOG Resources (EOG -0.6%), Diamondback Energy (FANG +1.3%) and PDC Energy (PDCE -4.4%), as well as stocks in “the next rung down,” including Hess (HES -3.5%), Cenovus Energy (CVE -1.8%), Anadarko Petroleum (APC -1.1%), Encana (ECA -4%), Continental Resources (CLR -2.1%) and Whiting Petroleum (WLL -0.6%).
- Now read Oil, interest rates and game theory: Why prices have further to fall
Wed, Apr. 6, 2:46 PM
- Stifel analysts downgrade Anadarko Petroleum (APC +2.9%), Continental Resources (CLR +2.5%), EOG Resources (EOG +0.2%), Matador Resources (MTDR +4.1%) and SM Energy (SM +5.1%) to Hold from Buy, saying the stocks are too risky ahead of OPEC's April 17 meeting.
- The firm says mixed signals from OPEC ministers, ramping volumes from Iran, and potential backlash from Saudi Arabia heightens oil price risk, causing it to become more defensive with its energy recommendations.
- Stifel believes the five stocks are either underhedged on their production or outspending current 2016 cash flow.
- Now read Merrill Lynch on Oil: The bottom is in
Tue, Mar. 22, 6:06 PM
- For the first time in years, drillers are expected to add less oil from new fields in 2016 than they lose to natural decline in old ones, according to an analysis by Rystad Energy.
- New projects expected to generate ~3M bbl/day will come from new projects this year compared with 3.3M bbl/day lost from established fields, but the decline will outstrip new output by 1.2M bbl/day in 2017 as investment cuts made during the oil rout start to take effect on the way to a "very strong effect" by 2020, Rystad says.
- In the deepwater Gulf of Mexico this year, Shell (RDS.A, RDS.B) is scheduled to start the Stones project, with projects run by Noble Energy (NYSE:NBL) and Freeport McMoran (NYSE:FCX) also due to begin; Anadarko Petroleum (NYSE:APC) started the Heidelberg field in January.
- Eni (NYSE:E) commenced the Goliat field in the Arctic this month, Shell started producing from a new area of the BC-10 project in Brazil earlier this month, and Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) plans to begin output from the TEN field offshore Ghana this summer.
- Morgan Stanley estimates nine projects are in contention to get a green light this year, including BP’s Mad Dog Phase 2 in the Gulf of Mexico and Eni’s Zohr gas field in Egypt, yet Rystad believes these developments will not be enough to counter the natural decline in oil fields that are starting to suffer from lower investment.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DWTI, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Sat, Mar. 12, 8:25 AM
- Markets have been waiting for U.S. oil companies to cut production amid lower crude prices, but many of the companies have been paying their top executives to keep the oil flowing, according to a WSJ analysis.
- “You want to know why most of the industry outspent cash flow last year trying to grow production? That's the way they're paid," says EOG Resources (NYSE:EOG) CEO William Thomas.
- An example: Hess (NYSE:HES) CEO John Hess earned more than $1M in 2014 (the most recent year available for pay data), which was more than a third of his bonus, because the company beat production and reserve targets.
- Also: Anadarko Petroleum (NYSE:APC) CEO R.A. Walker earned ~$1.5M because the company’s output rose 8% and exceeded goals for finding new oil and gas deposits.
- Thomas and others at EOG derived just 8% of their bonuses from hitting production and reserve targets in 2014, and instead placed more emphasis on return on capital, relative stock price and spending, WSJ says.
- Some shareholder activists are seeking to limit bonuses tied to production and reserve growth, pitching proxy ballot measures at companies such as Chesapeake Energy (NYSE:CHK), ConocoPhillips (NYSE:COP) and Devon Energy (NYSE:DVN).
- Companies will detail how they calculated 2015 bonuses in proxy filings beginning this month.
Fri, Mar. 11, 11:59 AM
- Anadarko Petroleum (APC +8.5%) is upgraded to Buy from Neutral with a $58 price target, raised from $50, at Goldman Sachs, citing a favorable combination of shale assets and offshore startups, and potential for further asset sales that can help strengthen the balance sheet.
- Goldman sees the potential for leverage improvement in 2017 via higher commodity prices in 2017; Y/Y oil production growth, as APC is among a select group of E&Ps that should grow oil production in 2017; and potential asset sales.
- APC shares have sold off sharply vs. other high quality E&Ps, and Goldman says as investor concerns around balance sheet deterioration have failed to give credit for potential asset sales which APC has historically done as part of normal portfolio management.
Thu, Mar. 10, 1:03 PM
- Anadarko Petroleum (APC -1.8%) says it is cutting 1,000 jobs, or ~17% of its total workforce, to cope with the downturn in oil and gas prices.
- APC had said last month it would chop its capital spending by half this year and evaluate its staffing needs as it reduces activity.
- APC does not specify where the jobs were eliminated, but says the cuts were spread across most organizations within the company.
Wed, Mar. 9, 7:20 PM
- Oil production in the Permian Basin has been much more resilient in the face of the ~65% drop in oil prices since mid-2014 than other shale regions, and in fact has been climbing steadily while the Eagle Ford and Bakken plays are showing overall declines.
- As of early February, Permian's oil production slightly exceeded 2M bbl/day - up from 1.4M bbl/day at the beginning of 2014 - even though the drilling rig count for the basin fell to 181 from about 550 a year earlier, and EIA data released Monday projects Permian’s output at 2.036M bbl/day while Eagle Ford and Bakken are expected to continue to drop.
- "If you are in an oil-producing related business, the Permian Basin is the place to be in 2016,” says energy consultant Charles Perry.
- Relevant tickers include PXD, OXY, CVX, COP, CXO, APA, DVN, APC, XOM, NBL, CPE, PE, FANG, RSPP, LPI, XEC, EQT
Wed, Mar. 2, 10:44 AM
- Anadarko Petroleum (APC -0.1%) is named Top Pick among U.S. E&P stocks at Macquarie, which rates shares at Outperform with a $60 price target.
- APC plans on exiting 2016 with 170 iDUCs and does not expect to accelerate capital spending in 2016, even if commodity prices improve, Macquarie says, adding that APC will keep the cash on the balance sheet as it works through 2016, even under a slightly more favorable commodity price outlook.
- APC says it intends to achieve asset sales worth $2B-$3B in 2016, and already has monetized $1.3B, but the firm notes that if fixed income markets remain closed and asset sale proceeds are at the low end of expectations, the potential for equity could resurface in 2017 with $2B in debt due in 2017 following $1.75B in 2016.
Tue, Mar. 1, 9:17 AM
- Anadarko Petroleum (NYSE:APC) +3.4% premarket after announcing a nearly 50% cut in FY 2016 capex and plans to monetize up to $3B in assets during the year.
- APC says it foresees 2016 capex of $2.6B-$2.8B, including a $2.5B Y/Y reduction in investment toward U.S. onshore activities; APC is reducing its U.S. onshore rig count by 80% to five operated rigs - four in the Delaware Basin and one in the DJ Basin - while focusing on its base production and retaining the flexibility to leverage its inventory of ~230 drilled but intentionally uncompleted wells.
- APC says it has doubled its Delaware Basin recoverable resource estimate to more than 2B boe.
- In the Gulf of Mexico, APC plans to shift its focus to tieback oil opportunities, which it says are more capital efficient and offer returns of more than 30% vs. today's strip prices.
- APC also says its decision to reduce its dividend will save $450M in cash this year.
Wed, Feb. 24, 6:34 PM
- Anadarko Petroleum (NYSE:APC) +4.3% AH after announcing it has closed or signed agreements to sell ~$1.3B worth of assets YTD, and saying it will actively pursue other sales opportunities this year.
- APC says the divestments include a $750M sale of its 100% interest in Springfield Pipeline, whose sole asset is a 50.1% stake in the Maverick Basin gathering system in south Texas, to Western Gas Partners (NYSE:WES).
- APC says it also sold future royalty income from its soda ash and coal leases in Wyoming to an unnamed party for $420M, as well as the sale of its East Chalk asset in Texas to Zarvona Energy for $105M.
Sat, Feb. 20, 8:25 AM
- Moody’s says it has downgraded a total of 28 energy companies since December, including another eight yesterday.
- Anadarko Petroleum (NYSE:APC), Continental Resources (NYSE:CLR), Hess (NYSE:HES), Murphy Oil (NYSE:MUR), Southwestern Energy (NYSE:SWN) and Western Gas Partners (NYSE:WES) were cut to junk levels.
- National Fuel Gas (NYSE:NFG) and Noble Energy (NYSE:NBL) were lowered to Baa3, one notch above junk.
- Outlooks for Cimarex Energy (NYSE:XEC) and EQT Corp. (NYSE:EQT) were confirmed above junk without downgrades, while EQT Midstream (NYSE:EQM) was affirmed in junk territory but not downgraded.
- Moody's says weakness in prices for crude oil and natural gas has caused a fundamental change in the energy industry, whose ability to generate cash flow has fallen substantially - a condition Moody's believes will persist for "several years," so it is in the process of recalibrating the ratings of many energy companies to reflect the industry shift.
- More downgrades are sure to be on the way following last month's move by the ratings agency in placing the credit ratings of 120 energy companies and 55 mining companies from around the world on review for possible downgrade.
Fri, Feb. 19, 7:17 PM
- Even with the price of oil at just ~$30/bbl, the U.S. Energy Information Administration foresees crude production from the Gulf of Mexico hitting record levels in 2017.
- The EIA projects Gulf production - which generally is less sensitive to short-term crude pricing movement than onshore shale production - will average 1.63M bbl/day in 2016 and 1.79M bbl/day in 2017, including hitting 1.91M bbl/day in December 2017; The previous high of more than 1.7M came in 2009 ahead of the 2010 drilling moratorium after the Deepwater Horizon spill.
- The low price of oil is keeping most energy companies from approving new Gulf projects, but several already are in the works, such as Shell’s (RDS.A, RDS.B) Stones and Noble Energy’s (NYSE:NBL) Gunflint.
- Some of the projects already in operation include Shell’s Perdido and Mars B projects, Exxon’s (NYSE:XOM) and Anadarko Petroleum’s (NYSE:APC) Lucius, and NBL’s Rio Grande; APC’s Heidelberg field just came online in January.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DWTI, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Anadarko Petroleum Corp. is an independent exploration and production company. Its asset portfolio includes positions in onshore resource plays in the Rocky Mountains region, the southern U. S. and the Appalachian basin. The company is also an independent producer in the deepwater Gulf of... More
Sector: Basic Materials
Industry: Independent Oil & Gas
Country: United States
Other News & PR