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We maintain our Neutral recommendation on Anadarko Petroleum Corporation (APC - Analyst Report). The oil and gas exploration as well as production operator presently holds a Zacks Rank #2 (Buy).

Why the Reiteration?

Anadarko Petroleum reported favorable financial results in the first quarter 2013 with both earnings and revenue widely beating our expectations. The reiteration however takes into account the impact of violent hurricanes – as predicted by the National Oceanic Atmospheric Administration – on the company’s deep sea operations in the months ahead.

Nevertheless, continued production growth from its Wattenberg and Eagleford plays and ongoing exploration programs will contribute to substantial earnings flow. The company’s Gulf of Mexico prospects are set to act as key growth drivers notably after the addition of Shenandoah and Phobos discoveries.

On the flip side, fluctuations in commodity prices will continue to affect Anadarko Petroleum's business. Moreover, it has a solid presence in Africa. The political disturbances in the continent may pose serious threats to Anadarko Petroleum’s drilling operations. The fear of political instability resurfacing in Mozambique will be a cause of concern for the company especially with its recent natural gas reservoir discovery there.

All said, we believe the company’s series of gas processing and transportation projects in the U.S. will help drive its growth trajectory.

Other Stocks to Consider

Anadarko Petroleum’s substantial domestic investments will strengthen its position in the industry. Other oil and gas players also looking good at the moment are Zacks Ranked #2 EOG Resources Inc. (EOG - Analyst Report), Encana Corp. (ECA - Analyst Report) and Noble Energy Inc. (NBL - Analyst Report).

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