Replies to post #178 on Anadarko Petroleum Corporation (APC)

[OilStockReport]

APC benefiting from the high oil prices.

Anadarko posted a 3.5% increase in Q1 2011, revenues to $3.25 billion from $3.1 billion in Q1 2010, and most of the that increase came from 26% jump in the average realized prices of crude oil and condensates. The company sold 19 million barrels of crude oil and condensates at an average price of $94.85 per barrel compared to the 20 million barrels at an average price of $75.18 per barrel during Q1 2010.

Several factors such as the: 1) the increasing pace of economic recovery, 2) the increase in global demand for oil, and 3) the unrest in the Middle East and North Africa contributed to the rise in crude oil prices during the quarter

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[OilStockReport]

APC better than EOG?

[OilStockReport]

Looking good in the Eagle Ford too.

The APC data look best, but come with a gotcha. APC, which owns a 25% interest in the Macondo well, may face an uncertain amount of liability for last summer‘s spill, although APC denies any responsibility. Plus APC has significant interests in the Gulf of Mexico. The development of some of these has been hindered by the moratorium on drilling (and the slower permitting process now that the moratorium is over). I should mention that APC has made three new discoveries in the Gulf of Mexico this year. Plus it has a recent big discovery off the coast of Ghana. These might factor into your decision about this stock.

[OilStockReport]

Anadarko Petroleum Corporation (APC) is one of the world’s largest independent oil and gas exploration and production companies. It markets natural gas, crude oil, condensate, and oil and natural gas liquids (NGLs), as well as owns and operates natural-gas gathering, processing, treating, and transportation systems.

The stock comes second in our list with a year-to-date return of 8%. The company’s financial performance during the last five years reflects its heavy exposure to the international oil prices. In terms of revenue, though APC registered a net 5-year CAGR of 12% (2005-2010), there are significant variations in between which are almost identical to international oil price movements.

More importantly, in times of rising oil prices (2006-2008), the company’s profitability followed its sales pattern almost exactly; however, this relationship has weakened during the last two years which shows certain shortcomings in adjusting its cost structure required to maintain the past margins. However, this transition is expected to be completed in the current year as the company is all set to grow its bottomline by 77%.

In addition, the stock has kept its “premium” momentum over its closest competitors, Apache Corporation (APA) and Canadian Natural Resources Limited (CNQ), since July 2011 which is expected to sustain on the back of rising oil prices internationally.