This stock is up about 25% in the last month. It started going up only days after I sold my modest position I'm sorry to say. The reason I sold it, is that I really hadn't kept up with them, and I already had positions in WLL, CHK, and APA which I felt more comfortable with.
Anadarko is a premier offshore explorer, operating 10 offshore deepwater drillships at the moment and going up to 12 this summer. This puts them in the same neighborhood as much larger integrated companies like Shell, Exxon, BP, Chevron. Only Petrobras has substantially more deepwater rigs going. 10 of these rigs will be operating in the US Gulf of Mexico. Anadarko has had a string of drilling successes over the last decade. Besides discoveries in the Gulf of Mexico, they have discovered West African offshore fields, and most notably a huge offshore gas deposit in offshore Mozambique, East Africa. This area will ultimately be a very significant LNG exporter. As they always do, after proving up their discovery, they immediately started selling down their interest to monetize their position.
Litigation: They had a minority interest in the Deepwater Horizon well operated by BP, and had to settle their liabilities for $4b in 2011. Then they've had an outstanding liability from environmental damage caused by the now-defunct subsidiary of Kerr McGee, Tronox. Kerr McGee was acquired some years ago, and it turned out that they had done tremendous environmental damage at their subsidiary. The recent stock price spike was investors favorable reaction to a $4.15b settlement of this liability.
Besides their deepwater activities, they are heavily investing in four US onshore plays, Watenberg (Colorado), Eagleford, Delaware Basin Permian, and the dry North Eastern Marcellus. They also have about a $10b equity stake in WGP, a publicly traded midstream MLP. If you net that out, they are certainly looking more attractive.
My sense is that they are a very good operator, growing production at 7% or so YOY while generating substantial free cash flow (if you don't count their $8b + of legal settlements). I have mixed feelings here on the value after the recent pop.
Anadarko is a premier offshore explorer, operating 10 offshore deepwater drillships at the moment and going up to 12 this summer. This puts them in the same neighborhood as much larger integrated companies like Shell, Exxon, BP, Chevron. Only Petrobras has substantially more deepwater rigs going. 10 of these rigs will be operating in the US Gulf of Mexico. Anadarko has had a string of drilling successes over the last decade. Besides discoveries in the Gulf of Mexico, they have discovered West African offshore fields, and most notably a huge offshore gas deposit in offshore Mozambique, East Africa. This area will ultimately be a very significant LNG exporter. As they always do, after proving up their discovery, they immediately started selling down their interest to monetize their position.
Litigation: They had a minority interest in the Deepwater Horizon well operated by BP, and had to settle their liabilities for $4b in 2011. Then they've had an outstanding liability from environmental damage caused by the now-defunct subsidiary of Kerr McGee, Tronox. Kerr McGee was acquired some years ago, and it turned out that they had done tremendous environmental damage at their subsidiary. The recent stock price spike was investors favorable reaction to a $4.15b settlement of this liability.
Besides their deepwater activities, they are heavily investing in four US onshore plays, Watenberg (Colorado), Eagleford, Delaware Basin Permian, and the dry North Eastern Marcellus. They also have about a $10b equity stake in WGP, a publicly traded midstream MLP. If you net that out, they are certainly looking more attractive.
My sense is that they are a very good operator, growing production at 7% or so YOY while generating substantial free cash flow (if you don't count their $8b + of legal settlements). I have mixed feelings here on the value after the recent pop.
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