UPDATE: Citigroup Reiterates Buy Rating, Raises PT on Anadarko Petroleum Corporation Following ONGC Videsh Agreement Announcement

In a report published Tuesday, Citigroup analyst Robert S. Morris reiterated a Buy rating on Anadarko Petroleum Corporation APC, and raised the price target from $105.00 to $108.00. In the report, Citigroup noted, “APC announced an agreement with ONGC Videsh Ltd. to sell a 10% stake in Mozambique Offshore Area 1 for $2.64bn cash with closing expected around year end. Anadarko will retain a 26.5% WI and remain the operator. The value was slightly above our estimate of ~$2.5bn and, notably, is $165mm more than what ONGC agreed to pay Videocon for its identical 10% stake. We were a bit surprised that Anadarko did not strike a deal for a partial carry on its share of future development costs in lieu of cash, similar to its other sell-downs, although this would still have likely entailed an upfront cash tax payment to the government of Mozambique. Anadarko and its partners are continuing to negotiate for a long-term gas sales contract, although a final agreement won't be inked until a FEED study is completed while project FID is expected around one year from now with start-up of two LNG trains still targeted for late-2018/early-2019 with an estimated cost of $13-16bn gross (with ~$1.0bn gross spent so far).” Anadarko Petroleum Corporation closed on Monday at $91.02.