Wednesday, February 20, 2013

Anadarko Guidance

Today Anadarko released details of its 2013 capital program and guidance. 2013 is expected to be one of the best years in company history. Capital Expenditures are estimated to be within the range of $7.2-$7.6 billion and will focus on projects that are estimated to generate return rates between 30 and 100 percent. Sales volume is expected to increase 5 percent, with high margin oil sales justifying most of the increase. The increase in oil sales will be primarly driven by increased activity in the Wattenberg and Eagleford horizontal programs. Furthermore, Anadarko remains focused on creating value by advancing high margin international oil and deep water development mega projects in Mozambique, Ghana, and Algeria, as well as continuing a very active exploration program.

Anadarko closed at $80.37, down 4.47 percent primarily due to worries concerning the possibility of Quantitative Easing ending prematurely. Equities within the energy space suffered the most losses because they are primarily driven by prospects of future economic growth. An end to QE in addition to a possibility of the debt crisis going unsolved has sent investors fleeing.

Despite today's bear run I do not believe QE will end anytime soon because the Fed has not come close to reaching its goal of 6.5 percent unemployment. I do not believe the Fed will end QE before budget cuts are negotiated on the contrary, a new QE program might be necessary to absorb the impact they will have on the U.S. economy.

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