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Anadarko to Sell Marcellus Shale Assets to Alta Resources Unit
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Independent oil and natural gas exploration and production company Anadarko Petroleum Corporation announced that it has agreed to sell its operated and non-operated upstream assets and operated midstream assets in Marcellus Shale in north-central Pennsylvania to Alta Marcellus Development, LLC, a wholly owned subsidiary of Alta Resources Development, LLC, for nearly $1.24 billion.
The divestiture covers nearly 195,000 net acres, which had generated sales volumes of 469 million cubic feet per day in the third quarter of 2016. The transaction is expected to close in the first quarter of 2017, subject to necessary approvals.
Non-Core Asset Selloff on Track
To focus on high-return assets and improve capital efficiency, Anadarko has been systematically selling its non-core properties since 2004. Keeping with this, year to date, the company has announced or closed monetization in excess of $5 billion.
The divestment of these assets will allow Anadarko to focus on its oil-levered assets in the Delaware and Denver-Julesburg (DJ) basins.
A Similar Move by a Peer
Like Anadarko, Devon Energy (DVN - Free Report) has also been focused on shedding its non-core assets to concentrate on its core operations. In doing so, the company has sold assets worth nearly $3.2 billion in 2016 to increase its financial strength and streamline operations, exceeding its asset monetization target of $2–$3 billion for the year. The company utilized part of the divesture proceeds to lower debt levels and strengthen its investment-grade balance sheet, and the rest to bolster its position in the resource-rich U.S. plays, led by the STACK and Delaware Basin.
Anadarko’s Focus on Oil Assets
In tandem with its divestitures, Anadarko is working on strengthening its existing oil portfolio through strategic acquisitions. In September, the company inked a deal to acquire Freeport McMoRan Oil & Gas’ deepwater Gulf of Mexico assets for a consideration of $2 billion in a bid to expand its operations in the region and gain additional scope for exploration. The company closed the acquisition on Dec 15.
The acquisition doubled Anadarko’s ownership in the Lucius development to 49% from 23.8%, thereby enabling the company to leverage future value addition in the region and achieve over 400 million barrels of oil equivalent (BOE) in estimated recovery from the development.
The oil and gas business is highly competitive and some of Anadarko’s competitors have greater and more diverse resources. In addition, choppy recovery in oil prices is adversely impacting the company’s financial results.
Zacks Rank & Key Picks
Anadarko carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space include Newfield Exploration Company and Abraxas Petroleum Corporation (AXAS - Free Report) .
Newfield Exploration has seen 10 upward estimate revisions for the current quarter over the last 60 days. During this 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).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Anadarko to Sell Marcellus Shale Assets to Alta Resources Unit
Independent oil and natural gas exploration and production company Anadarko Petroleum Corporation announced that it has agreed to sell its operated and non-operated upstream assets and operated midstream assets in Marcellus Shale in north-central Pennsylvania to Alta Marcellus Development, LLC, a wholly owned subsidiary of Alta Resources Development, LLC, for nearly $1.24 billion.
The divestiture covers nearly 195,000 net acres, which had generated sales volumes of 469 million cubic feet per day in the third quarter of 2016. The transaction is expected to close in the first quarter of 2017, subject to necessary approvals.
Non-Core Asset Selloff on Track
To focus on high-return assets and improve capital efficiency, Anadarko has been systematically selling its non-core properties since 2004. Keeping with this, year to date, the company has announced or closed monetization in excess of $5 billion.
The divestment of these assets will allow Anadarko to focus on its oil-levered assets in the Delaware and Denver-Julesburg (DJ) basins.
A Similar Move by a Peer
Like Anadarko, Devon Energy (DVN - Free Report) has also been focused on shedding its non-core assets to concentrate on its core operations. In doing so, the company has sold assets worth nearly $3.2 billion in 2016 to increase its financial strength and streamline operations, exceeding its asset monetization target of $2–$3 billion for the year. The company utilized part of the divesture proceeds to lower debt levels and strengthen its investment-grade balance sheet, and the rest to bolster its position in the resource-rich U.S. plays, led by the STACK and Delaware Basin.
Anadarko’s Focus on Oil Assets
In tandem with its divestitures, Anadarko is working on strengthening its existing oil portfolio through strategic acquisitions. In September, the company inked a deal to acquire Freeport McMoRan Oil & Gas’ deepwater Gulf of Mexico assets for a consideration of $2 billion in a bid to expand its operations in the region and gain additional scope for exploration. The company closed the acquisition on Dec 15.
The acquisition doubled Anadarko’s ownership in the Lucius development to 49% from 23.8%, thereby enabling the company to leverage future value addition in the region and achieve over 400 million barrels of oil equivalent (BOE) in estimated recovery from the development.
Price Movement
Shares of Anadarko have returned 37.8% over the last 12 months, underperforming the Zacks categorized Oil & Gas – U.S. Exploration and Production industry’s gain of 39.6%.
The oil and gas business is highly competitive and some of Anadarko’s competitors have greater and more diverse resources. In addition, choppy recovery in oil prices is adversely impacting the company’s financial results.
Zacks Rank & Key Picks
Anadarko carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space include Newfield Exploration Company and Abraxas Petroleum Corporation (AXAS - Free Report) .
Newfield Exploration has seen 10 upward estimate revisions for the current quarter over the last 60 days. During this 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).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>