We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Anadarko Discloses New Buyout, Lifts Oil Volume Outlook
Read MoreHide Full Article
Anadarko Petroleum Corporation made a number of announcements recently, including the acquisition of Freeport-McMoRan Oil & Gas's deepwater Gulf of Mexico (“GOM”) assets for $2 billion, an increase in the oil volume projection, plans to accelerate rig activity and an update on deepwater drilling activities in the Gulf of Mexico.
Acquisition Synergies
The acquisition of the GOM assets will make Anadarko the largest operator of floating production facilities in the deepwater GOM, besides doubling its ownership in the Lucius development to nearly 49% and doubling GOM production to over 160,000 barrels of oil equivalent (“BOE”) per day. As a result, Anadarko is expected to put up a stellar performance despite the volatile oil price environment.
Given that this region is responsible for Anadarko’s higher-margin oil growth profile, the acquisition is expected to generate future free cash flow of nearly $3 billion over the next five years to boost the company’s assets in the Delaware and DJ basins.
Oil Volumes to Improve
Increased investment in the U.S. Delaware and DJ basins, an improving cost structure and midstream infrastructure advantages is expected to position Anadarko to achieve a five-year compounded oil growth rate of 12–14% amid the $50–$60 per barrel oil price environment.
In the fourth quarter, Anadarko added four rigs in the Delaware and DJ Basins prior to closing the GOM acquisition and aims to increase the total number of rigs in these basins to 20 by the end of the first quarter of 2017. The company’s increased investment in these assets allows it to garner returns of 35% to over 60% at the current commodity prices.
Drilling Activity
Anadarko’s Warrior exploration well has encountered over than 210 net feet of oil pay, while the Phobos appraisal well has witnessed over 90 net feet of high-quality oil pay. Anardarko owns a 65% working interest in Warrior and a 100% working interest in Phobos.
Meanwhile, the fifth production well at the Heidelberg field has encountered reservoir sand with over 150 net feet of oil pay to date. The well is expected to commence production in early 2017. Write how this drilling activity will benefit the company…
Notably, Anadarko operates in an industry that requires a huge amount of investment in upgrading and expanding operations. In September, the company’s long-term debt was rated “Ba1” and “BBB” by Moody’s and S&P 500, respectively. Further, its credit outlook was revised to stable from negative. This has been driving investor interest in the stock and in turn, its price.
Zacks Rank & Key Picks
Anadarko carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Newfield Exploration Company , Abraxas Petroleum Corporation (AXAS - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) .
Newfield Exploration has seen nine upward estimate revisions for the current quarter over the last 60 days. During the same time period, its estimates have increased from 28 cents to 37 cents. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Abraxas Petroleum has seen four upward estimate revisions for the current quarter over the last 60 days. During this period, its estimates narrowed from a loss of 2 cents to a loss of a penny. Abraxas carries a Zacks Rank #2 (Buy).
Cheniere Energy, another Zacks Rank #2 stock, has seen one upward estimate revision for the current quarter over the last 60 days.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Anadarko Discloses New Buyout, Lifts Oil Volume Outlook
Anadarko Petroleum Corporation made a number of announcements recently, including the acquisition of Freeport-McMoRan Oil & Gas's deepwater Gulf of Mexico (“GOM”) assets for $2 billion, an increase in the oil volume projection, plans to accelerate rig activity and an update on deepwater drilling activities in the Gulf of Mexico.
Acquisition Synergies
The acquisition of the GOM assets will make Anadarko the largest operator of floating production facilities in the deepwater GOM, besides doubling its ownership in the Lucius development to nearly 49% and doubling GOM production to over 160,000 barrels of oil equivalent (“BOE”) per day. As a result, Anadarko is expected to put up a stellar performance despite the volatile oil price environment.
Given that this region is responsible for Anadarko’s higher-margin oil growth profile, the acquisition is expected to generate future free cash flow of nearly $3 billion over the next five years to boost the company’s assets in the Delaware and DJ basins.
Oil Volumes to Improve
Increased investment in the U.S. Delaware and DJ basins, an improving cost structure and midstream infrastructure advantages is expected to position Anadarko to achieve a five-year compounded oil growth rate of 12–14% amid the $50–$60 per barrel oil price environment.
In the fourth quarter, Anadarko added four rigs in the Delaware and DJ Basins prior to closing the GOM acquisition and aims to increase the total number of rigs in these basins to 20 by the end of the first quarter of 2017. The company’s increased investment in these assets allows it to garner returns of 35% to over 60% at the current commodity prices.
Drilling Activity
Anadarko’s Warrior exploration well has encountered over than 210 net feet of oil pay, while the Phobos appraisal well has witnessed over 90 net feet of high-quality oil pay. Anardarko owns a 65% working interest in Warrior and a 100% working interest in Phobos.
Meanwhile, the fifth production well at the Heidelberg field has encountered reservoir sand with over 150 net feet of oil pay to date. The well is expected to commence production in early 2017. Write how this drilling activity will benefit the company…
Price Movement
Shares of Anadarko have gained 50.5% over the last 12 months, outperforming the Zacks categorized Oil & Gas – U.S. Exploration and Production industry’s gain of 48.3%.
Notably, Anadarko operates in an industry that requires a huge amount of investment in upgrading and expanding operations. In September, the company’s long-term debt was rated “Ba1” and “BBB” by Moody’s and S&P 500, respectively. Further, its credit outlook was revised to stable from negative. This has been driving investor interest in the stock and in turn, its price.
Zacks Rank & Key Picks
Anadarko carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Newfield Exploration Company , Abraxas Petroleum Corporation (AXAS - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) .
Newfield Exploration has seen nine upward estimate revisions for the current quarter over the last 60 days. During the same time period, its estimates have increased from 28 cents to 37 cents. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Abraxas Petroleum has seen four upward estimate revisions for the current quarter over the last 60 days. During this period, its estimates narrowed from a loss of 2 cents to a loss of a penny. Abraxas carries a Zacks Rank #2 (Buy).
Cheniere Energy, another Zacks Rank #2 stock, has seen one upward estimate revision for the current quarter over the last 60 days.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>