Anadarko Petroleum Corp is engaged in the exploration and production of oil and natural gas. The Company's three operating segments are: Oil and gas exploration and production, Midstream and Marketing.
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.
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.
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.
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.
“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.
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.
Marcellus shale gas producers will benefit more than producers elsewhere in the U.S. because of several favorable circumstances - including large producing wells in the northeast U.S. conveniently located near major markets - even if prices were to decline to 2012 levels, according to a Moody’s report.
Anadarko Petroleum (APC), Southwestern Energy (SWN) and Chesapeake Energy (CHK) - all of which entered the play early during a weak natural gas price environment - especially have benefited, Moody's says.
An infrastructural overhaul is still needed as buyers move away from traditional production hubs such as the Haynesville and Barnett, the credit rating agency says; the transition already has caused a decline in credit quality for Exco Resources (XCO), Forest Oil (FST) and Quicksilver Resources (KWK).
Mozambique’s government said it’s in talks with Rio Tinto (RIO -0.7%) over capital gains tax on the company’s $4.2B acquisition of Benga coal mines from Riversdale Mining in 2011.
"At some stage, they have to follow local law," as the acquisition involved mining assets in Mozambique, a government official says.
Mozambique is looking to more than double the $1.3B it raised from capital gains tax on five deals since 2012 with another 10 transactions pending; Anadarko Petroleum (APC) paid tax of $520M after selling its 10% stake in a Mozambique gas field to ONGC Videsh.
Anadarko Petroleum (APC +0.3%) has lagged other U.S. E&P names thanks to the massive potential damages linked to its Kerr-McGee purchase, but APC shares now trade at a 25%-45% discount to peers - cheap, no matter how you slice the Tronox liabilities - Deutsche Bank believes.
While some of the perceived value gap is driven by Tronox uncertainty, the firm notes even a Tronox liability at the very high end of a potential range - say, $20B - would value APC's onshore business at a still discounted multiple of 4.9x its estimated 2015 EV/EBITDA; the asset value is "clearly apparent."
South Africa’s ruling African National Congress has used its parliamentary majority to push through changes to minerals laws that companies such as Exxon Mobil (XOM) and BHP Billiton (BHP) say will hurt investment.
The new law will secure for the state a free 20% stake in all new energy ventures and enable it to buy an unspecified additional share at an "agreed price,” and it enable the mines minister to declare some minerals strategic and force companies processing them to sell some output to local manufacturers.
Rules for energy companies were made more onerous after lawmakers scrapped a 50% cap on the size of the stake the state may demand in new projects, which would have “a chilling effect" on investment, according to a trade association whose members include XOM, BHP, Anadarko (APC) and Total (TOT).
Pennsylvania requires oil and gas drillers pay royalties of at least 12.5%, but lets drillers deduct costs for transporting, processing and marketing - and CHK appears to take a much more aggressive approach to those deductions than other energy companies operating there, including Anadarko (APC) and Statoil (STO).
"I'm paying them to take my gas," says one landowner who claims his royalties don't cover the added taxes for owning commercial property.
The public outcry has grown so loud that Pennsylvania Gov. Corbett, who has received campaign contributions from the company, wrote an open letter last month asking the state attorney general to investigate.
Anadarko Petroleum (APC +1.2%) has lagged most of its E&P peers, but Argus thinks it’s time to buy, upgrading shares and setting a target price of $96.
Argus likes APC's prospects for 5%-7% annual production growth through 2020 and its industry-leading exploration program, as well as the substantial base of reserve assets, which management should be able to develop or monetize to boost shareholder value.
The firm says its former Hold rating had been based on a view that potential liabilities in the Tronox case would keep pressure on APC shares, but proceeds from recent asset divestitures have eased concerns about the impact of any future settlement.