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.
May. 22, 2014, 8:59 AM
- Total (TOT) and Repsol (REPYY, REPYF) are the latest western oil companies to pull out some expatriate employees from Libya amid escalating violence there, posing the latest challenge to the Libyan oil industry's fragile recovery.
- Strikes and armed occupation of oil terminals already have reduced the Libya's oil output to less than 20% of its normal level of ~1.5M bbl/day.
- Among other oil majors with a Libyan presence are Statoil (STO), ConocoPhillips (COP), Marathon Oil (MRO), Hess (HES), Eni (E) and Occidental Petroleum (APC).
May. 20, 2014, 3:32 PM
- Anadarko Petroleum (APC -1.1%) is looking too pricey after a 25% YTD gain for Barclays analyst Thomas Driscoll, who downgrades shares to Equal Weight from Overweight.
- It is easy to understand the enthusiasm for APC considering the strong record of deepwater exploration success, the willingness to monetize assets and the large discovery in Mozambique, Driscoll says; yet Continental Resources (CLR), EOG Resources (EOG) and Noble Energy (NBL) all are likely to grow twice as fast as APC while lacking any appreciable premium in their shares.
- The analyst prefers Devon Energy (DVN +1.2%), which he says has made decisive steps to upgrade its portfolio in recent months, significantly improving its near-term investment opportunity set.
May. 13, 2014, 4:42 PM| 1 Comment
May. 9, 2014, 11:58 AM
- Wall Street’s idea of investing in climate change means investors are piling into natural gas - the least polluting fossil fuel - as energy have accounted for nearly two-thirds of the $8B of inflows into sector-based ETFs this year.
- A White House advisory panel said this week that global warming already is blighting the U.S. with more intense coastal flooding, rainstorms and wildfires, but “weather extremes are good for the energy business," says money manager Skip Aylesworth.
- Climate change is proving to be a boon for energy investment; on the day the report was issued, the S&P Energy Index hit a record, and $322M flowed into ETFs that specialize in energy.
- "Natural gas is a potential bridge to new technologies that are green or clean,” says State Street's David Mazza, which he says has sparked investor interest in companies such as Nabors Industries (NBR), EOG Resources (EOG), Anadarko Petroleum (APC) and Chesapeake Energy (CHK).
- ETFs: XLE, ERX, VDE, OIH, ERY, FCG, DIG, DUG, GASL, IYE, GASX, PXJ, PXI, PSCE, FENY, RYE, FXN, DDG
May. 6, 2014, 3:43 PM
- Anadarko Petroleum (APC +3.2%) pushes to a new 52-week high after its better than expected Q1, and Citigroup upgrades shares to Buy from Neutral with a $115 price target.
- Citi notes APC's strong Q1 operational and financial results, and that the company has a significant amount of financial flexibility along with a deep asset base to continue pushing growth rates higher.
- In today's earnings call, CEO Al Walker said he expects the long-running Tronox legal saga to end sometime during H2, enabling APC to focus on exploration, development and project management.
May. 5, 2014, 5:25 PM
- Anadarko Petroleum (APC) +2.3% AH after it swung to a Q1 loss due to a $4.3B contingent loss related to its settlement of litigation involving the 2006 acquisition of Kerr-McGee, but excluding settlement impacts and other items, adjusted earnings rose to $1.26 from $1.08 a year ago, and revenue easily beat expectations in soaring 50% to $5.84B.
- Delivered record daily sales volumes of 819K boe/day, up 3.2% Y/Y, boosted by a ~10K boe jump in output from wells in fields including the Eagle Ford in south Texas and the Wattenberg in Colorado.
- Raises the midpoint of FY 2014 sales-volume guidance by 3.5M boe.
- Says successful appraisal drilling activities in the Orca field increased total estimated recoverable resources in Mozambique's Offshore Area 1 to 50T-70T cf or more of natural gas.
May. 5, 2014, 4:13 PM| Comment!
May. 4, 2014, 5:35 PM
- AEIS, AIG, APC, APL, ARE, AXLL, BDE, BNFT, CATM, CFN, CKEC, CKP, CRK, DATA, ECOL, ECOM, EGOV, ELNK, ENH, EOG, EOX, FLDM, FN, G, HCLP, HGR, HI, IDTI, ININ, KAR, LF, MCEP, MED, MR, NLS, OAS, OTTR, PIKE, PRI, PSMI, QLYS, RBC, RGR, ROSE, RWT, SALE, SKH, SMG, SNHY, STAG, SZYM, THC, TXRH, UAM, VECO, VNO, VVUS, WG, YY, ZIPR.
Apr. 16, 2014, 11:24 AM
- Anadarko Petroleum (APC +0.9%) suspends drilling on a Gulf of Mexico deepwater rig that was rocked by weather-driven waves, apparently rupturing the hull column and flooding the ballast tank.
- The Ensco (ESV -1.5%) rig was conducting exploration activities for APC in the Nansen field when the weather front moved through the area; it was slammed by a giant wave and began taking on water.
- ESV says the situation is stable for now, and there is no need to evacuate the 116 people on board the rig.
Apr. 12, 2014, 8:25 AM
- Ohio geologists for the first time have linked earthquake activity in the Marcellus Shale to fracking, a new connection that could have implications for oil and gas drilling in the state and beyond.
- As a result, Ohio is setting new permitting conditions in quake-sensitive areas and has halted drilling indefinitely at the site of five quakes last month in the Youngstown area.
- Earthquakes recently rattled residents in Oklahoma, putting that state on track for record quake activity this year, which some seismologists say may be tied to oil and gas exploration.
- Among companies drilling in the Marcellus and Utica shales: RRC, CHK, COG, ACMP, APC, ATLS, CVX, CNX, DTE, EOG, EQT, XCO, XOM, MWE, NBL, RGP, REXX, RICE, RDS.A, RDS.B,SWN, STO, SXL, TLM, WMB, WPX.
Apr. 8, 2014, 6:21 PM
- Drilling fees on nearly 6,500 natural gas wells in the Marceluus Shale will bring more than $630M to Pennsylvania's coffers by the end of the year, three years after the state passed the fees into law, but critics say the oil and gas companies aren’t paying enough.
- Range Resources (RRC) paid the most with $27M in fees last year, followed by Chesapeake Energy (CHK) with $26.6M; among others, Cabot Oil & Gas (COG) forked over $13.2M, Anadarko Petroleum (APC) paid $12.3M, and EOG Resources (EOG) coughed up $4.5M.
- Critics who want the companies to pay more point to a report from the state’s independent fiscal branch that found Pennsylvania’s drilling fees were lower than severance tax rates on gas production in Texas and other states, which do not have drilling fees.
Apr. 7, 2014, 10:58 AM
- Stifel analysts raise price targets on their favorite exploration and production stocks, saying all the ingredients are in place for crude oil prices to stay elevated.
- Anadarko's (APC) target is lifted to $104 from $87 after underperforming the sector, but the Tronox environmental contamination suit went back decades and last week's settlement removes a huge overhang from the stock.
- Canadian Natural Resources (CNQ), considered one of the top Canadian oil stocks with the largest reserve base among its peers, is raised to $42 from $38.
- EOG Resources (EOG), which is reporting record oil and gas production and revolutionizing the U.S. energy position, is upped to $120 from $100.
- Also receiving price target raises: GPOR, NFX, PQ, SWN.
Apr. 4, 2014, 6:02 PM
- Anadarko shares (APC) have rallied ~17.5% over the past two sessions on the heels of the announcement that it settled fraud claims related to its Kerr-McGee acquisition, and they could rise even more, Barron's Johanna Bennett writes.
- More than just a brief bounce in the stock, litigation concerns have not only masked significant increases in tangible hard asset value but also led to the shares being under-owned by institutional investors, Credit Suisse analyst Arun Jayaram says.
- APC appears to have multiple options to fund the $5.1B settlement, and Jayaram argues the company still will be able to pursue a large buyback or meaningful dividend increase.
Apr. 4, 2014, 10:58 AM
- Analysts jump aboard the Anadarko (APC +2.5%) bandwagon after the settlement in the Tronox lawsuit removes market uncertainty.
- J.P. Morgan upgrades shares to Overweight from Underweight with a new $129 price target, up from $84, viewing the settlement as positive for the stock even following yesterday's 14.5% surge.
- Raymond James raises its price target to $118 from $94, noting that APC's balance sheet is in great shape with more than enough liquidity to handle the settlement amount, not to mention its ownership of Western Gas shares valued at ~$9.8B.
- Morgan Stanley lifts its price target to $115 from $110, seeing APC now free to unlock significant value potential through asset sales, share buybacks and/or accelerated growth.
Apr. 3, 2014, 6:26 PM
- “It’s wonderful to get this behind us because it allows Anadarko to be fairly valued in the marketplace," CEO Al Walker says of APC's $5.15B settlement related to its purchase of Kerr-McGee and the TROX bankruptcy, adding that lifting the cloud of uncertainty will let the company pursue ventures it had not been able to while the legal fights continued.
- “This is the best move Al Walker has ever made,” Oppenheimer analyst Fadel Gheit says, noting today's 14.5% rise in APC shares. "This is a premier exploration company that has this dark cloud hanging over them and now its gone."
- APC's general counsel says the company has substantial liquidity to pay for the settlement, including more than $6B in cash and a $5B unused line of credit.
Apr. 3, 2014, 2:40 PM
- Anadarko (APC +12.1%) confirms it has entered into a settlement with the plaintiffs in the Tronox (TROX +1.6%) case to resolve all claims against Kerr-McGee, agreeing to pay $5.15B to settle environmental claims left behind when it bought the company for $18B in 2005.
- APC expects to record a gross tax benefit of ~$1.65B associated with the settlement, offset by ~$1.1B in uncertain tax positions, resulting in a net tax benefit of ~$550M.
- The U.S. had initially sought $25B from APC to clean up 2,772 sites and compensate ~8,100 TROX claimants, and a court in December said APC could expect to pay damages as low as $5.2B and as high as $14.2B.
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