Anadarko Petroleum Corp. (NYSE: APC) reported after market close today (Monday) a fourth-quarter profit loss, due to a $4 billion pay out made last quarter related to the BP PlC (NYSE ADR: BP) oil spill in 2010.
Anadarko Petroleum Corp. Stock
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Anadarko, the largest U.S. independent oil and gas company by market value, reported a $358 million, or 72 cents per share, loss for the quarter. Revenue rose 42.7% to $3.84 billion from the year earlier quarter.
Excluding the spill-related payout and other items, Anadarko earned 85 cents a share. Wall Street expected the company to book earnings of 60 cents a share, more than doubling the 29 cents earned in 2010's last quarter.
Now with its legal battles behind it, the company is ready to take off as higher oil prices and a recent discovery drive future earnings.
Anadarko Petroleum Corp. (NYSE: APC) Headed Higher
Anadarko has long been a big player in U.S. onshore oil and gas production, and it's about to get even bigger.
The company last year reevaluated the Wattenberg shale in northeast Colorado and now believes it holds between 500 million and 1.5 billion barrels of oil and natural gas.
A billion-barrel field is a rare find - only a handful have been discovered in the United States - and this new discovery could increase Anadarko's annual production rate in the region by 20% in 2012.
Based on 11 test wells, Anadarko is confident it can drill between 1,200 and 2,700 wells over time, and will ramp up Wattenberg's development by drilling 160 wells in 2012.
And these wells will have a quick payback rate.
A great example of this is its Dolph 27-1 well in the middle of the Wattenberg field. Anadarko has a 100% working and net revenue interest in the well, so it funds all operations and collects all the revenue. The well has 600,000 barrels of estimated ultimate recovery (the amount of oil and gas potentially recoverable from the well).
That gives the well about $15 million in net present value before taxes based on an oil price of about $90/barrel.
Tudor, Pickering, Holt & Co. last year named the company "King of the Rockies" and raised its net-asset-value estimate for Anadarko by 5% per share. And Goldman Sachs has a "buy" rating on the stock.
Additionally, John Paulson - the fund manager that made millions shorting the markets before the 2007-08 crash - had nearly $900 million in Anadarko at the end of September.
Anadarko Petroleum shares have climbed 8% so far this year. Wall Street gave the stock a one-year price target of $99, a 21% premium to Monday's $82.87 closing price.
News and Related Story Links:
- Money Morning:
Anadarko Petroleum Corp.(NYSE: APC) is a "King" in the U.S. Oil and Gas Industry - Money Morning:
Four Natural Gas Companies Investors Can Buy Right Now - Money Morning:
2012 Natural Gas Price Forecast: Why to Avoid the "Widow Maker" - Reuters:
Anadarko profit beats, output at top of guided range - The Wall Street Journal:
Anadarko Raises Colorado Oil Tally
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