On May 17, 2013 shares of Anadarko Petroleum Corporation (APC - Analyst Report) touched a new 52-week high of $90.46. The company’s high-quality exploration programs in the Gulf of Mexico (GoM) and West African prospects drove the stock to a new high. Anadarko recorded earnings surprises in the last four quarters with an average beat of 17.08%.
The company’s notable high-end programs in 2012 that primarily propelled earnings include the oil discoveries in Ghana and Cote d'Ivoire and natural gas discovery in Mozambique. This has helped in expanding the company’s reserve portfolio.
The joint venture agreements for the development of the Lucius project with an undisclosed party and the Salt Creek field project with Linn Energy, LLC were also significant highlights. Successful appraisals in the deepwater GoM and assets in Africa drove the healthy performance at Anadarko Petroleum last year.
The company’s onshore assets in the Wattenberg, Eagleford Shale, Greater Natural Buttes, and the Marcellus Shale basins logged in record production of 100,000 barrels of oil equivalent (BOE) per day at the end of 2012.
Anadarko Petroleum is continuing to tap the resource-rich GoM and African prospects through the first quarter of 2013. Year to date, the company has signed a 12.75% interest sell-off deal with an unnamed entity at its Heidelberg oil play which is expected to release first oil soon. The new Phobos oil discovery in the GoM will further spur returns, going forward.
Meanwhile, the company’s sound financial position backed by robust cash flows has aided Anadarko Petroleum to effectively execute its exploration activities.
The present valuation also makes the shares of Anadarko Petroleum attractive. The forward price/earnings (P/E) multiple of 21.9x is higher than the peer group average of 17.3x, reflecting a premium of 26.6%. In addition, Return on Equity ("ROE") of the company is 8.5%, higher than the peer group average of 8.0%.
Currently Anadarko Petroleum holds a Zacks Rank #3 (Hold). Oil and gas exploration stocks that are well-placed with a Zacks #1 include Abraxas Petroleum Corporation (AXAS - Snapshot Report), EPL Oil & Gas, Inc. and Sandridge Mississippian Trust II (SDR).
Based in The Woodlands, Texas, Anadarko Petroleum Corporation engages in the exploration, development, production, and marketing of natural gas, crude oil, condensate, and natural gas liquids in the United States and internationally.