Anadarko Petroleum: Boasting Strong Growth Profile

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The Woodlands, Texas-based Anadarko Petroleum (NYSE:APC) held its first investor day in almost two years and discussed both its short-term and long-term goals. The company reiterated its long-term growth of 5 percent to 7 percent assuming minimal dry gas investment and initiated 2014 guidance calling for 6 percent to 7 percent growth from continuing assets with $8.1 billion to $8.4 billion in capital spending before its controlled midstream subsidiary. Both the company’s ongoing operations and potential projects offer significant potential. Moreover, similar to its peers, Anadarko possesses meaningful upside potential in North American shale plays.

Onshore operations driving growth

Anadarko’s onshore production volumes are expected to increase by 9 percent to 10 percent in 2014. The onshore operations contributed nearly 75 percent of the production in 2013. Similarly in 2014, majority of the production is expected to come from the onshore activities. The onshore operations are expected to take the major chunk (60 percent) of the 2014 capex of $8.1 billion to $8.5 billion, representing an increase of 7.8 percent from the $7.7 billion spent last year. Moreover, APC has scheduled at least fifteen new well-planned exploration wells on the prolific U.S. Gulf of Mexico and Mozambique, which should further increase its operational capacity.

Strong asset base

Anadarko represents a very strong asset base. The company has posted strong results over the past year and is unique among its peers in maintaining a high-risk but high-potential exploration program around the globe. APC’s 2013 production from Wattenberg was much better than expected, and combined with the healthy returns from the newly established Eagle Ford, pushed Natural Gas Liquid’s (NGL) production well above the expectations. Going forward, the company expects more than 20 percent growth from Wattenberg by 2018.

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