Lior Cohen • Thu, Jan. 22
- Anadarko Petroleum will present its fourth-quarter earnings report in February.
- Oil production is expected to pick up, while natural gas operations are likely to decline.
- The company could still face $3.5 billion penalty payments.
Why Anadarko Petroleum Could Be A Good Pick In A Challenging Crude Environment
- Anadarko is doing the right thing by investing in high-margin oil assets, as this will allow it to improve its bottom line performance as oil pricing improves.
- Anadarko's focus on LNG will help it benefit from a growing market.
- As compared to peers such as Apache, Anadarko's bottom line is expected to grow in the next five years, which indicates that the company is adopting smart strategies.
- Anadarko Petroleum has suffered as oil pricing has taken a hit and OPEC might not cut production.
- Anadarko, however, is improving production profile and this will help it profit from an improvement in oil market dynamics in the long run.
- Anadarko's impressive cash flow figures and expected long-term earnings improvements indicate that there is hope for the company after the current weakness is over.
- Anadarko Petroleum expanded its "high-confidence" area in the Delaware Basin capable of targeting the Wolfcamp intervals.
- Anadarko has brought several wells online in the Delaware Wolfcamp that had 30-day IP rates above 1,000 BOE/d.
- Currently the Permian doesn't have enough pipeline takeaway capacity out of the region, which is pushing down realized prices.
- New pipelines being built will help alleviate the strain surging oil production has put on existing infrastructure in the area.
- The fall in oil prices has pushed Anadarko down from $110 a share to below $90, opening up a buying opportunity.
- Anadarko Petroleum increased its Wattenberg output by 87% year-over-year to 189,000 BOE/d, making the play a major source of liquids growth.
- A liquids heavy production mix makes the Wattenberg a very economical play.
- Near term start up of the Lucius Gulf of Mexico project will pad Anadarko's oil production levels.
- Negative FCF and $6.3 billion in net debt should be closely watched.
- APC boasts a high quality asset base and an excellent track record.
- It continues to be the most active portfolio manager among its peers and has outperformed its peers YTD.
- It offers an ideal combination of upstream operational momentum and value acceleration potential to drive further outperformance.
Anadarko Posts Strong Revenue Growth Despite Oil Price Slump
- Anadarko was able to secure total revenues of $5 billion, which were 30% higher than the revenues reported a year ago in the corresponding quarter.
- Anadarko is following up on its portfolio management initiatives by divesting from low margin projects to divert capital towards projects that are displaying signs of strong growth in the future.
- The oil market could remain volatile in the future, but Anadarko sees this as an opportunity to buy off oil producing assets at bargain prices in the future.
- The recent partnerships that have surfaced indicate that Anadarko is working towards strengthening its long term growth prospects.
Third Quarter Result Expectations And Investor Outlook For AnadarkoAll Bases Covered • Oct. 27, 2014
- The company was able to deliver on the sales front and recorded sales of 848,000 barrels of oil equivalent per day.
- For the Wattenberg Field, the company has plans to drill nearly 360 horizontal wells and operate 13 rigs in the field on average.
- Its 52 week low comes in at $73.60, while the 52 week high comes in at $113.51. Analysts expect share prices to reach $120.63 in the next year.
- Oil and gas prices remain volatile in the market and their impact on future revenues remain uncertain.
There's More To Anadarko's Declining Price Than Just Oil Price Correction
- Oil price decline is one contributing factor in Anadarko’s lowered stock price, but it is not the whole story.
- Company’s operations looked strong, as depicted by increased revenues in the first half, but will the company maintain the same standing in the second half?
- No unexpected increase is anticipated in dividends, as well as share repurchases.
- Anadarko derives more than 60% of its revenues from oil products and is currently focusing its business more on oil rather than natural gas.
- The company has completed all major work at the Lucius Project and has completed the Heidelberg Project.
- The company achieved production milestones in two of its oil projects during the second quarter which will further enhance the oil segment’s contribution to total revenue.
- Anadarko is also building one of the largest LNG projects ever taken up by a Western energy company in Mozambique but there are certain risks associated with this project.
- These projects would significantly increase production volume but due to falling oil, natural gas, and LNG prices the profit margin is going to be squeezed in the coming years.
- Anadarko’s second quarter total hydrocarbon production stood at 848,000 barrels of oil equivalent per day, 50,000 barrels more per day than the previous year, and a record for the company.
- Deutsche Bank choose Anadarko Petroleum Corp. as one of their top picks with a $137 price target, 29% higher than the current price.
- Anadarko has consistently added about 51% more hydrocarbon reserves to its existing reserves than its production each year.
- The Wattenberg Field continues to benefit the company in the long term, as the company seeks to drill over 360 additional wells in the current year.
- Additionally, Anadarko has a well-positioned portfolio of U.S. assets, and is determined to increase its liquid contribution to around 45 percent of the total production.
- The company expects its 2014 capital budget to be around $8.6-$8.8 billion, and aims to retain the historical reserve replacement ratio of 150 percent.
- However, the $15 billion LNG project poses certain risks, such as start-up delays and overrun costs.
- Anadarko Petroleum’s focus towards growing liquid and oil production is paving the path for future growth.
- Its industry-leading liquid and oil assets with higher margins and strong cash generating potential putts it in a position to post big profits in the coming quarters.
- Anadarko is an attractive pick with the recent fall in price.
- Anadarko’s onshore assets, particularly the Wattenberg field, are well positioned to ensure bright long-term growth prospects for the company.
- The company expects to grow its hydrocarbon sales volume from the Wattenberg field by a CAGR of 20% in the long run.
- The company is also well positioned in the Gulf of Mexico.
- With the progression of recent projects, the company is expected to deliver increased sales volume.
Is Anadarko Petroleum Overvalued Or Should You Buy Now?
- Anadarko has seen its stock skyrocket from $80 in April to around $110. The rise was mostly due to the settlement of a US Justice Department case.
- The financial metrics look good for Anadarko. Among these metrics are EV/EBITDA, Return on Capital, and Debt to Equity (even with the new bond issue).
- Anadarko is a strong player in many major finds throughout the world, including Eagle Ford and Marcellus Shale.
- Catalysts for an increase in stock price include; issues in the Middle East, a possible merger/acquisition, and high net asset value per share.
Anadarko Petroleum Isn't The Best House In The Independent Drilling NeighborhoodAbba's Aces • Jul. 7, 2014
- The ominous cloud over the spill cleanup case has been lifted.
- The stock is fairly valued on 2015 earnings estimates.
- The technicals indicate some more downward momentum on the price of the stock.
Nov. 25, 2014, 2:46 PM
- "Not surprisingly, billionaires reduced their energy allocations (NYSEARCA:XLE) during Q3," says Direxion, unveiling the quarterly rebalance for the iBillionaire Index (which serves as the benchmark for the IBLN ETF). Attention was instead shifted to healthcare (NYSEARCA:XLV) and materials (NYSEARCA:XLB), with companies like Humana (NYSE:HUM) and Monsanto (NYSE:MON).
- Also added to the index: TMO, GM, FB, CBS, GOOG, MAS, APD, DAL, NOV, WHR, THC, ABBV.
- Dropped from the index: AIG, MCK, CTSH, MSI, RIG, CI, APC, GPS, MSFT, CMCSA, NFLX, MHFI, WMB, ICE.
- Outlying sectors: Consumer Discretionary (NYSEARCA:XLY) makes up 23.33% of the iBillionaire Index vs. 11.68% for the S&P 500, and Industrials (NYSEARCA:XLI) and financials (NYSEARCA:XLF) make up just 6.67% each of the index vs. 10.44 and 16.30 of the S&P 500, respectively. Consumer Staples (NYSEARCA:XLP) have zero representation in the index vs. 9.7% in the S&P 500.
- Previously: Direxion launched an ETF with iBillionaire today
Nov. 21, 2014, 5:55 PM
- Four years after the Deepwater Horizon disaster, giant new oil projects are returning to the Gulf of Mexico - bigger and more expensive than ever - even as U.S. oil prices are below $80/bbl at a four-year low.
- New projects alone have the combined capacity to pump ~900K bbl/day: Hess (NYSE:HES) said Monday it had started pumping crude from its deepwater Tubular Bells installation, Exxon (NYSE:XOM) and Anadarko (NYSE:APC) plan to start up two more major Gulf projects in coming months, and Hess, Chevron (NYSE:CVX) and other partners recently OK'd a $6B Gulf development.
- Even BP is returning in a big way, with two Gulf projects and plans to spend $4B/year in the Gulf for the next decade, as it works on technology to drill at greater depths.
- All this is happening even as costs are jumping, partly because companies are drilling farther from shore and in deeper waters; deepwater wells are up to 25% more expensive today than in 2010, and drilling the average deepwater Gulf well takes 13% longer than it did before the 2010 spill.
- Shell’s (RDS.A, RDS.B) 100K bbl/day Olympus, which came online ahead of schedule and under budget, began tapping oil and gas in the Gulf in February; it is also working on a new Gulf project that will tap an oil field under 9,500 feet of water, 3x deeper than Olympus.
Nov. 17, 2014, 3:59 PM
- In the wake of Halliburton's (NYSE:HAL) $34.6B offer for Baker Hughes (NYSE:BHI), it appears the next hot sector for M&A action is energy: More consolidation is likely, given the weakness for stocks in the oilfield services subsector, low interest rates, and as a drop in demand for oil increases cutthroat pricing competition.
- Speculation is running rampant as investors try to figure out who is next in an industry that is sure to undergo some more consolidation; some names identified as possible candidates include Kodiak Oil and Gas (NYSE:KOG), Marathon Oil (NYSE:MRO), Northern Oil and Gas (NYSEMKT:NOG), Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD).
- GE could go after National Oilwell Varco (NYSE:NOV) to show it is serious about the energy industry after last year’s purchase of pumpmaker Lufkin, Royal Bank of Canada says, and Oppenheimer says even BP could be an acquisition candidate.
- But Morgan Stanley does not see offshore drillers getting in on the action, as larger players like Diamond Offshore (NYSE:DO), Transocean (NYSE:RIG) and Seadrill (NYSE:SDRL) are still addressing dividend concerns while smaller companies such as Atwood Oceanics (NYSE:ATW) and Pacific Drilling (NYSE:PACD) still trade close to replacement value.
Nov. 14, 2014, 4:56 PM
- New developments and the expansion of older oil fields are expected to lift deepwater Gulf of Mexico production 18% Y/Y to 1.9M boe/day in 2016, the first new production peak seen since 2009, according to Wood Mackenzie’s latest outlook.
- However, production is expected to plateau for the remainder of the decade following the 2016 peak due to the depletion of legacy fields and a limited number of new projects coming onstream.
- Among top Gulf producers: RDS.A, RDS.B, BP, CVX, BHP, APC, APA, HES, E, EXXI.
Nov. 13, 2014, 5:39 PM
- Anadarko Petroleum (NYSE:APC) has suspended some operations in Colorado after a Halliburton (NYSE:HAL) worker was killed and two others were seriously injured at an APC well site in the Wattenberg oil and gas field.
- The workers were trying to heat a high-pressure water line that had frozen in record-breaking cold conditions, when it ruptured.
Nov. 11, 2014, 2:52 PM
- Count BofA's Doug Leggate among analysts seeing an opportunity to become contrarian bullish on the energy sector, which he says is now discounting $75 oil.
- His top picks in the sector are Occidental Petroleum (NYSE:OXY) and Hess (NYSE:HES), while Anadarko Petroleum (NYSE:APC) and Devon Energy (NYSE:DVN) justify another look; also, pure play gas names Cabot Oil & Gas (NYSE:COG), Range Resources (NYSE:RRC) and Southwestern Energy (NYSE:SWN) remain Buy rated.
- On the technical side, BofA's Stephen Suttmeier notes the sector hit capitulation levels in mid-October not seen since 2002, suggesting the worst is over and energy is poised to build a base and head higher.
- Earlier: Top energy stocks may have bottomed even if oil has not, J.P. Morgan says.
Nov. 11, 2014, 11:26 AM
- A new report from J.P. Morgan says hammered stocks in the energy exploration and production sector may have bottomed, even if the price of oil hasn’t yet.
- JPM says investors looking to buy energy stocks should buy the E&P names with operational momentum and strong balance sheets, including Anadarko Petroleum (NYSE:APC) and EOG Resources (NYSE:EOG), which the firm sees as potential takeover candidates.
- The firm also likes Noble Energy (NYSE:NBL), Pioneer Natural Resources (NYSE:PXD) and Cimarex Energy (NYSE:XEC).
Nov. 11, 2014, 3:25 AM
- Clearing the final hurdle for its cleanup settlement, Anadarko Petroleum (NYSE:APC) has received the green-light from a federal judge to pay $5.15B to resolve pollution claims against its Kerr-McGee unit.
- The deal, reached in April, settled a lawsuit against Anadarko from creditors of Tronox (NYSE:TROX), the paint materials maker that was once a unit of Kerr-McGee.
- The bankruptcy judge who oversaw Tronox's Chapter 11 case and presided over the trial, approved the deal in May.
- Previously: Confirmed: Anadarko settles Tronox cleanup case for $5.15B
- Previously: Anadarko Petroleum's $5.15B pollution settlement approved by judge
Nov. 7, 2014, 7:19 AM
Nov. 5, 2014, 12:45 PM
- Anadarko Petroleum (APC +2.7%) VP of international exploration Frank Patterson worries the shale boom may be less sustainable than it seems, noting that unlike conventional drilling which taps a reservoir where oil or gas has collected, fracking taps the source rock where petroleum originates - what’s left after that?
- Also, young geologists are learning the manufacturing-like process of drilling lots of shale wells at the expense of learning how to explore for new oil, which Patterson calls “potentially a big problem in the future” for E&P companies.
- Meanwhile, Denton becomes the first city in Texas to ban fracking, as voters approved an initiative against the controversial drilling method (NYSEARCA:FRAK).
Oct. 29, 2014, 3:32 PM
- Anadarko Petroleum (APC +0.5%) has been higher for most of the session despite Q3 earnings that missed analyst estimates, as record sales volumes of 849K boe/day improved its liquids product mix to 51% from 43%.
- Credit Suisse says APC’s results are "much better than meets the eye," noting that operating results were strong; in fact, APC raised its full-year production guidance by 1.5% to 305M boe at the mid-point on the strength of U.S. oil production, which the firm says is the key driver of the stock.
- APC’s adjusted cash flow reflects the anticipated deferral of the $550M Tronox tax benefit to Q1 2015; the firm says adjusted Q3 2014 cash flow/share of $4.58 would have comfortably topped its estimate and the Street.
Oct. 28, 2014, 5:46 PM
- Anadarko Petroleum (NYSE:APC) +0.4% AH after Q3 earnings fell short of analyst expectations but revenue rose 30% to $5.01B, as stronger sales volume offset the impact of weaker average selling prices.
- Q3 total sales volume of crude oil, natural gas and natural gas liquids gained 9.5% Y/Y to 849K bbl/day from 775K a year ago.
- APC had sold its China subsidiary along with other assets during Q3, increasing its cash on hand to $8.3B.
- APC raises its full-year sales volume expectations for the third time this year, to a new range of 304M-306M boe, primarily driven by strong results from its Wattenberg horizontal program, where oil volumes doubled from Q3 of last year.
- Separately, P-E firm KKR says it will help APC develop its Eaglebine acreage in south Texas with a non-operated stake in the project; financial terms were not disclosed, but KKR says it expects to participate in 500 wells.
Oct. 28, 2014, 4:14 PM| Comment!
Oct. 27, 2014, 5:35 PM
- AEC, AFG, AFL, AJG, AMCC, AMP, APC, ARI, AZPN, BGFV, BLDP, BOOM, BXP, CAP, CBT, CEB, CHMT, CHRW, CINF, CRAY, DLR, DNB, DYAX, EA, EIX, EPR, EQR, ESRX, EXP, EXTR, FARO, FB, FEIC, FISV, GFIG, GILD, GPRE, HIW, HLIT, HTA, HTS, HURN, INAP, INVN, IPHI, KEYW, KIM, KONA, MAC, MAR, MCK, MRCY, MWA, NANO, NFX, OI, PEI, PLT, PNRA, PSMT, RJET, ROG, RPXC, SKT, SM, SWI, TQNT, TRN, TSS, UDR, ULTI, USNA, VRSK, VRTX, WDC, WES, WGP, WNC, WSH, WTS, WYNN, X, XCO, XOOM, ZLTQ
Oct. 21, 2014, 3:58 PM
- Global Hunter revisits its commodity price outlook, now moving to $83 long-term oil vs. $85 previously, applying a higher discount rate to future cash flows and modeling more conservative assumptions with regards to future rig activity, which results in downward revisions for several exploration and production stocks price targets and some rating changes (Briefing.com).
- Anadarko Petroleum (NYSE:APC), Gulfport Energy (NASDAQ:GPOR) and Rex Energy (NASDAQ:REXX) are upgraded to Buy; Talisman Energy (NYSE:TLM) is raised to Speculative Buy from Neutral.
- Devon Energy (NYSE:DVN), Hess (NYSE:HES), Occidental Petroleum (NYSE:OXY) and Kosmos Energy (NYSE:KOS) are upgraded to Accumulate from Neutral.
- Cobalt Energy (NYSE:CIE) is downgraded to Speculative Buy from Buy.
Oct. 16, 2014, 2:32 PM
- Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) and partners including Anadarko Petroleum (NYSE:APC) and Kosmos Energy (NYSE:KOS) are planning to invest $2.2B next year to drill wells in Ghana’s Jubilee and Tweneboa-Enyenra-Ntomme, or TEN, oil fields, the deputy general manager of Tullow Oil Ghana says.
- The partners plan to invest $20B over the next decade to boost the country's crude oil output to 500K bbl/day from 103K now.
- Tullow, the operator of the projects, plans to drill two wells in the TEN field and as many as three wells at Jubilee.
APC vs. ETF Alternatives
Other News & PR