Anadarko Petroleum (APC, Financial) has some of the best oil fields in the industry, which is its greatest strength. In the onshore operations, the Wattenberg field and Eagle Ford shale were nothing short of incredible, resulting in full-year volume growth of 16%. Especially the Wattenberg field exceeded its own expectations and delivered at all fronts. Led by its strong performance, the management is working hard to replicate this success at its emerging Wolfcamp Shale in West Texas. This effort will improve its efficiency at the Wolfcamp Shale that will add to its growth in the coming days.
Diversification will drive growth
Apart from oil, the company also deals in natural gas and the developments at its Mozambique project will cheer the investors. Last year, Anadarko made the world’s largest discovery of natural gas reserves, off Mozambique’s northern coast. However, it couldn’t proceed with the project until the government had completed all the formalities related to the terms and conditions for exports. But now, with the Decree Law behind it, Anadarko has secured an additional non-binding LNG offtake agreement, which totals to more than 8 million tons per annum. This will be a major growth driver for the company as it will improve its top line in the coming years.
All the factors and its future plans discussed above sound good that will set Anadarko on the growth trajectory. According to an analyst at Stifel Nicolaus, “We believe that the potential upside from the active deep-water exploration portfolio and the upcoming production growth from existing large-scale discoveries continues to provide an attractive, growing production/resource base.”
Moreover, even in these challenging times, the company has increased its dividend by 50%, which reflects its commitment to its shareholders.
Headwinds and conclusion
But Anadarko is not the only one in this peril as many of its peers share the same fate. Moreover, with the crude showing no sign of a turnaround, the future of the oil industry seems gloomy. As per the latest developments, the U.S is in talks with Iran, which could lead to a possible nuclear agreement with the Persian Kingdom. The agreement will open doors for higher Iranian oil export, further sinking oil prices. Therefore, this deal is crucial, and investors must keenly watch the proceedings.
It will be a matter of time until we see some relief from this macroeconomic headwind, and Anadarko cannot do much to change the situation. However, the company is taking all the measures it can to improve its efficiency.
