Sunday, August 11, 2013

Anadarko Reports Earnings

                Anadarko reporting net income of $929 million or $1.83 per diluted share for the second quarter of 2013, which is nearly $300M better than our estimates had been.  We saw cash flow from operating activities come in at approximately $2.502B and discretionary cash flows totaled $1.98B.  These improved results were fueled by higher onshore production of 20,000 barrels a day.  This helped push daily production figures to 750,000 barrels a day.

                The company has continued to show strength in their exploration for new opportunities.  The firm reached drilling milestones at four large scale projects in Algeria, Ghana, and the Gulf of Mexico.  We also saw five new deep-water discoveries in the Gulf of Mexico & Mozambique.  Anadarko has had immense success in the deep-water arena, as they have a 70% success rate in their deep-water exploration and appraisal program.  

                We continue to look for Anadarko to show strong growth and we anticipate that the stock could move north of $100/share in the coming 6 to 9 months, with a price target of $122.62/share at the end of 2014.  The biggest risks we see are international unrest (Middle East), increased offshore drilling regulation, and potential oil spills.  We continue to hold that Anadarko Petroleum is a BUY and recommend a full position at its current price of $89.80.  

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