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Anadarko (APC) Scales 52-Week High on Asset Sale Strategy

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Shares of Anadarko Petroleum Corporation touched a new 52-week high of $65.47 in Wednesday’s trading session before closing slightly lower at $65.00.

Over the past 52 weeks, the company’s shares have ranged from a low of $28.16 on Jan 20, 2016 to a high of $65.47 on Nov 23, 2016. The average volume of shares traded over the last three months is 5.63 million.

What’s Driving the Stock?

In September, Anadarko Petroleum inked a deal to acquire Freeport McMoRan Oil & Gas’ deepwater Gulf of Mexico (GOM) assets for a consideration of $2 billion in a bid to expand its operations in the region and increase its scope for exploration. The transaction is anticipated to close by 2016 end.

ANADARKO PETROL Price and Consensus

 

ANADARKO PETROL Price and Consensus | ANADARKO PETROL Quote

The acquisition will double Anadarko’s ownership in the Lucius development to 49% from 23.8%, thereby enabling the company to leverage future value addition in the area and achieve over 400 million barrels of oil equivalent (BOE) in estimated recovery. The acquisition is expected to generate an additional $3 billion free cash flow over the next five years.

Additionally, to focus on high-return assets and achieve capital efficiency, Anadarko has been systematically selling its non-core properties since 2004. Having divested assets worth nearly $3 billion year to date, the company is on track to exceed asset sales of $4 billion in 2016. The company expects to receive over $1 billion as proceeds from the pending divestiture of the Carthage assets in East Texas. It utilized the proceeds to repay debts and strengthen the balance sheet.

Zacks Rank & Key Picks

Currently, Anadarko Petroleum carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Diamondback Energy, Inc. (FANG - Free Report) , Ultra Petroleum Corp. and Noble Energy, Inc. .

Diamondback Energy has seen 13 upward estimate revisions over the last month for 2016. Its estimates increased from $1.15 30 days ago to $1.39 today, reflecting an upside of 20.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ultra Petroleum, another Zacks Rank #1 stock, has seen 1 upward estimate revision over the last month for 2016. Its estimates increased from 77 cents 30 days ago to $1.63 today, reflecting an upside of 111.7%

Noble Energy has seen 12 upward estimate revisions over the last month for 2016. Its estimates narrowed from a loss of $1.08 30 days ago to a loss of 96 cents today, reflecting an upside of 11.1% The stock carries a Zacks Rank #2 (Buy).

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