Risk Reward Balance at Anadarko - Analyst Blog


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On May 19, we issued an updated research report on Anadarko Petroleum Corp. ( APC ). The oil & gas operator's diversified asset base allows it to maintain a healthy reserve portfolio. Anadarko Petroleum plans to invest around $9.0 billion to $9.5 billion in 2014 which will stimulate development activities, especially in domestic properties, leading to future reserve accretion.

However, disruption of operations on account of accidents and natural disasters remain a matter of concern. Moreover, the threat of political unrest in Africa could thwart the company's large-scale exploration programs.

Anadarko Petroleum, a Zacks Rank #3 (Hold) stock, posted impressive results in first-quarter 2014. Quarterly earnings as well as revenue outpaced the Zacks Consensus Estimates. On a year-over-year basis, top and bottom lines also outperformed backed by increased contribution from its U.S. assets.

Anadarko Petroleum's continued non-core asset divestitures will aid in funding its exploration activities, especially in the liquids-rich provinces of the U.S. In 2014, the company plans to shed its non-operating interest in the Bohai Bay field in offshore China for around $1.08 billion.

furthermore, Anadarko Petroleum is progressing well with its deepwater exploration programs as well as its onshore development projects. The company's premium assets which include the Colorado's Wattenberg, Texas' Eagleford and Delaware's WolfCamp basins will act as key production catalysts in the coming years. The operational start-up of midstream facilities like the Lancaster processing plant and Front Range Pipeline system will also lend upside to the positive momentum.

Moreover, the company continues to reward its shareholders with attractive dividend payments. Anadarko Petroleum recently hiked its dividend rate by 50% to 27 cents per share from 18 cents per share which will certainly retain investors' attention on the stock.

On the flip side, proposed fracking regulations by the U.S. Department of Interiors, which are likely to be finalized by the end of 2014, could undermine Anadarko Petroleum's key domestic operations.

Key Picks from the Sector

Other better-ranked stocks in this sector include Athlon Energy Inc. ( ATHL ), Encana Corporation ( ECA ) and RSP Permian, Inc. ( RSPP ). All the above oil and gas stocks currently carry a Zacks Rank #1 (Strong Buy).

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ANADARKO PETROL (APC): Free Stock Analysis Report

ATHLON ENERGY (ATHL): Free Stock Analysis Report

ENCANA CORP (ECA): Free Stock Analysis Report

RSP PERMIAN INC (RSPP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: APC , ATHL , ECA , RSPP

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